USD/JPY downside appears limited – Commerzbank

Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted that further downside in the pair appears limited.

Key Quotes

“USD/JPY is showing signs of stabilisation - the market continues to indicate that this is an ‘a-b-c’ correction only and it has reversed ahead of the 38.2% retracement at 111.98 area and the top of the daily cloud at 112.21. It continues to indicate that this is the end of the move lower and we continue to view the downside as limited. We note that the momentum indicators have turned higher also”.

“Rallies will need to regain 115.00/61 to alleviate downside pressure. Key short term resistance is the 16 month resistance line at 118.39. We need a close above here to confirm upside scope. Above the 118.60/66 recent highs we target 120.00/120.10, the 78.6% retracement of the move down from 2015. The 120.10 level is regarded as the last defence for the June 2015 high at 125.86”.