Yesterday, it was a good day of recovery for USD/JPY and we saw the pair closing the day in the positive zone. USD/JPY has been in an uptrend since it turned north on the 25th of March. The pair continues to hold above the mid-term upwards moving trendline, drawn exactly from the same date. Also, what we can notice is that on the shorter time-scale is that USD/JPY is forming a small rising channel.
For now, we remain bullish on USD/JPY, as we could see a continuation move higher within the aforementioned channel. The pair is above the key level of 110.25 and currently is aiming to make a move towards the 110.50 area, a break of which could open the path towards the 110.80 zone. There, USD/JPY could meet the upper bound of the channel. If the buying momentum remains strong, then there could be a possibility to see a break of that upper bound, and the pair could continue pushing towards the next key area of resistance at 111.40, marked by the high of 21st of May – the highest point in May.
On the downside, a move back below the 110.25 level, could interest a few bears in driving USD/JPY towards the 109.85 level, a break of which could send the pair to test the lower bound of the previously mentioned channel. If that area is not able to withhold USD/JPY from dropping further, then a test of the 109.20 level could become a reality. Slightly below that, the pair has another good level of support at 109.00, not to mention the mid-term upwards moving trendline, which could get tested as well, if the rate continues to slide lower.
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