- USD/JPY attempts minor recovery after Friday's plunge, but upside seems to struggle at 20-DMA at 112.65.
- Data on Friday showed US headline CPI unchanged on a monthly basis and yearly rate sliding further below the Fed's 2.0% medium-term range.
- Adding to disappointing inflation figures, monthly retail sales data contracted for the second straight month, further diminishing prospects for additional Fed rate hike action.
- Bearish Stochastics divergence keeps scope for further downside. We see bearish invalidation on break above 5-DMA at 113.10.
- 200-DMA at 111.65 in sight. Violation there will see further downside.
- Focus this week on the BoJ policy meeting, the central bank is expected to leave monetary policy unchanged defying other central banks on rate hikes.
Support levels - 112.30 (trendline), 112.15 (38.2% Fib), 111.65 (200-DMA)
Resistance levels - 112.65 (20-DMA), 113, 113.10 (5-DMA)
Call update: Our previous call (http://www.econotimes.com/FxWirePro-USD-JPY-recovery-capped-below-5-DMA-at-11360-bias-lower-good-to-short-rallies-801115) has hit TP1&2.
Recommendation: Book partial profits at lows. Trail stop loss to 113.10. Hold for 112.15/ 112/ 111.65.
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