USD/JPY indicators biased to downside risk, limited support between 99 and 95 - Scotiabank

Eric Theoret, Strategist at Scotiabank, noted that JPY remains range bound, consolidating around the mid-point of its five-session range while the technical outlook remains bearish.

Key Quotes

“JPY remains range bound, consolidating around the mid-point of its five-session range with an ongoing vulnerability to knee-jerk havendriven strength in periods of risk aversion.”

“USD/JPY short-term technicals: bearish—both trend and momentum signals are biased to downside risk and moving averages are bearishly aligned across a range of time horizons. Near-term congestion remains centered around 100.50, and the broader chart pattern appears to be one of a descending triangle, with a series of lower highs bouncing off a flat support level. The formation is typically resolved to the downside and we would anticipate a violent break with limited support between 99 and 95 (94.64 to be exact, the level roughly coinciding with the 61.8% Fibo retracement of the 2011-2015 rally).”