FxWirePro: USD/JPY pauses downside at 23.6% Fib, break below will see further weakness

• USD/JPY hit 2-week lows at 111.99 on Tuesday's trade, but quickly rebounded back to close above 112 handle.
   
• USD remains under pressure ahead of the release of the FOMC minutes later today.
   
• Data released earlier today showed Japan August machinery orders m/m bettered estimates, came in at 3.4 % (forecast 1.1 %) vs previous 8 %.
   
• Japan machinery y/y orders rose to 4.4 % (forecast 0.8 %) vs previous -7.5 %.
   
• USD/JPY is trading range bound, remains capped below 5-DMA at 112.60.
   
• Technical studies are bearish. Stochs have rolled over from overbought levels and RSI is biased lower. MACD is showing a bearish crossover.
   
• 'Bearish Cypher' pattern on daily charts also adds scope for downside in the pair.
   
• FOMC minutes are expected to reflect the hawkish surprise delivered by the Fed at its Sept meeting.
   
• US CPI and retail sales data on Friday will also be in focus for further direction in the pair. Higher-than-expected data should boost the greenback.

Support levels - 112 (nearly converged 20-DMA and 5W-SMA), 111.38 (cloud top), 111.10 (38.2% Fib retrace of 107.318 to 113.439 rally)

Resistance levels - 112.64 (5-DMA), 113, 113.43 (Oct 6 high)

Call update: Our previous call (https://www.econotimes.com/FxWirePro-Bearish-Cypher-pattern-raises-scope-for-downside-in-USD-JPY-bias-lower-stay-short-942286) has hit TP1.

Recommendation: Bias lower, hold for further downside.

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -61.1031 (Neutral), while Hourly JPY Spot Index was at -36.0049 (Neutral) at 0410 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

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