USD/JPY is still above its mid-term upwards moving trendline taken from the low of the 25th of March, which is a positive sign. But from the short-term perspective, the pair is stuck between the 112.17 and 112.80 levels. In the short-run, we could see a drop lower to test some key support levels or even the aforementioned trendline. Nevertheless, until that trendline is intact, the outlook could still be seen as positive.
For now, we will continue to monitor the previously mentioned short-term range between the 112.17 and 112.80 levels, but remain somewhat positive in the short run. If USD/JPY decides to make a move towards the upper side of that range and eventually break it, this could open the door towards the 113.40 barrier, where the pair could stall for a while. The barrier could be tough to overcome as it acted as strong resistance on the 8th of January.
On the downside, a break below the 112.17 level could interest a few more bears to jump in and drive the pair lower towards the next key area of support at 111.40, marked by the peak of May. A further drop below that level opens the path for a test of the abovementioned upside trendline that could initially stop the falling. This is where the big battle, over the faith of USD/JPY, between the bulls and the bears could start again.
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