FxWirePro: USD/JPY trades narrow range below 38.2% Fib, focus on key payrolls data

• USD/JPY has retraced from 7-week lows at 109.91 hit on Aug 1st trade.
   
• The greenback is expected to remain under pressure from US politics and dwindling odds for a Fed move in the next months.
   
• Momentum studies remain bearish, scope for test of channel base at 109.45.
   
• Violation at channel base would open doors for a steeper slide towards 108.80 (June low).
   
• Bearish invalidation only on decisive breakout above weekly 20-DMA at 111.25.
   
• Focus on US initial claims are due followed by ISM non-manufacturing, Markit services PMI and June’s factory orders, preceding the key payrolls due tomorrow.

Support levels - 110.42 (weekly 50-SMA), 110, 109.45 (channel base), 109, 108.80 (June lows)

Resistance levels - 111.07 (38.2% Fib retrace of 98.787 to 118.662 rally), 111.92 (20-DMA), 112

Recommendation: Technical indicators do not provide clear directional bias. We prefer to wait on sidelines.

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at 54.5812 (Neutral), while Hourly JPY Spot Index was at -28.5898 (Neutral) at 1120 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

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