FxWirePro: USD/JPY recovery fails to hold above 21-EMA, bearish divergence raises scope for further weakness

• USD/JPY bulls struggles to gain traction on Monday's trade. The pair slipped from highs at 109.83 to close below 21-EMA.
   
• Risk-off rampant across markets keeping safe haven flows into the Japanese Yen intact.
   
• Italian political crisis drives risk-aversion across markets as traders react negatively to the unfolding political drama.
   
• We see bearish divergence on stochs which raises scope for further downside in the pair.
   
• The pair likely to remain vulnerable to safe-haven flows supporting the yen.
   
• We see major support around 108.20 which is nearly converged 50 and 100 day MAs. 
   
• Close below 21-EMA has raised scope for test of 108.20 levels. Major weakness likely on break below.
   
• On the upside, 200-DMA is major resistance at 110.17. Break above could see some meaningful gains.
   
• Focus on nonfarm payrolls. We also have ADP private employment and Q1 GDP, second estimate (Wednesday).

Support levels - 109, 108.81 (38.2% Fib), 108.20 (nearly converged 50 and 100 day MAs)

Resistance levels - 109.43 (5-DMA), 109.80 (23.6% Fib), 110, 110.17 (200-DMA)

Recommendation: Good to gp short on upticks around 109.15/25, SL: 109.65, TP: 109/ 108.65/ 108.20

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at 34.2033 (Neutral), while Hourly JPY Spot Index was at 179.646 (Bullish) at 0745 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex. 

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