FxWirePro: USD/JPY fails to capitalize initial momentum, 109.00 handle in sight

USD/JPY chart - Trading View 

Spot Analysis:

USD/JPY was trading 0.10% lower on the day at 109.23 at around 09:25 GMT

Previous Session's High/Low: 109.65/ 109.18

Previous Week's High/Low: 109.78/ 108.34

Fundamental Overview:

USD/JPY edged higher in the early Asian session as U.S. dollar gained strength on geopolitical and market risk concerns.

However, the major struggled to build on the initial momentum and slipped lower to extend weakness for the 3rd straight session.

US Retail Sales and the University of Michigan’s Consumer Sentiment released on Friday fell below forecasts.

Escalating tension in the Middle East aided the attractiveness of the greenback on its safe haven appeal.

However, poor data last week reaffirmed the Fed's dovish view and kept the US dollar bulls on the defensive.

Further, persistent coronavirus jitters benefitted the safe-haven JPY and contributed to the selling bias.

Technical Analysis: 

- Price action is consolidating previous week's break above 200-week MA

- GMMA indicator shows major trend is bullish, while minor trend is neutral

- The pair has failed to extend break above daily cloud

- Stochs are on verge of rollback from overbought levels

Major Support and Resistance Levels:

Support - 109 (21-EMA), 108.78 (20-DMA), 108.42 (55-EMA)

Resistance - 109.68 (Cloud top), 109.84 (Upper BB), 110

Summary: USD/JPY is extending weakness for the 3rd straight session. Dip till 21-EMA at 109. Violation at 21-EMA will see test of 55-EMA at 108.42.