Technical Analysis:
- USD/JPY has broken major trendline support at 115.45, upside remain capped by 5-DMA at 115.77.
- Momentum has turned bearish, we see scope for test of 114 levels.
- RSI has slipped below 50 levels, MACD shows bearish trend continuation and Stochs are biased lower.
- 113.97, 23.6% Fib of 98.78 to 118.66 rally is next immediate support, below which the pair finds next support at 113.59 (50-DMA).
- Break below 50-DMA could see drag till 111 levels.
- On the flipside, bearish invalidation only on close above 20-DMA at 116.85.
Fundamental Factors:
- The US dollar which has been on the back-foot, collapsed overnight on the back of Trump's lack of conviction.
- Markets which were looking for something concrete in respect to Trump's policies, were left largely disappointed.
- Data released earlier on Thursday showed robust bank lending, current account figures in Japan which fuelled further downside in the pair.
- Japan’s November current account NSA decreased to 1415.5 bln JPY (forecast 1500.0 bln jpy) vs previous 1719.9 bln JPY, while December bank lending y/y increased to 2.6 % vs previous 2.4 %
TIME TREND INDEX OB/OS INDEX
1H Bearish Neutral
4H Bearish Neutral
1D Bearish Neutral
1W Neutral Neutral
Support levels - 114.25 (Jan 11 low), 114, 113.97 (23.6% Fib of 98.78 to 118.66 rally), 113.59 (50-DMA)
Resistance levels - 115, 115.45 (trendline), 115.76 (5-DMA), 116
Recommendation: Good to go long on rallies around 114.75/80, SL: 115.45, TP: 114.25/ 114/ 113.60
