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USDJPY bears find support after Japan's PM resignation


31 August 2020

USDJPY was hovering around the 50% Fibonacci retracement of the 112.21-101.17 downleg when the resignation of Japan’s prime minister Shinzo Abe boosted the safe-haven yen and triggered a steep sell-off in the pair on Friday.

The price pulled back below its simple moving averages (SMA) on the four-hour chart, but the area between the 38.2% Fibonacci of 105.40 and the 105.00 level managed to halt the decline once again, with the pair pushing efforts to recover the lost ground on Monday.

The 50-period SMA could act as immediate resistance around 106.00 with the help of the 20-period SMA as the rebound in the RSI and the Stochastics near oversold levels is switching the short-term bias from negative to neutral. That said, buyers may not get excited until the price closes above the 50% Fibonacci of 106.70 and sustains gains above its previous high of 107.00. In this case, the next hurdle could emerge near 107.50 and then around the 61.8% Fibonacci of 108.00, where the 200 SMA is fluctuating in the daily chart.

Otherwise, if the 50-period SMA rejects additional upside movements, the pair could revisit the 105.40-105.00 support region, a break of which may sharpen the decline probably towards July’s low of 104.18. Beneath that mark, the pair will put its five-month old downtrend back into play, turning the outlook more bearish in the medium-term picture.

Summarizing, USDJPY is currently holding a neutral bias, with immediate resistance expected to occur around 106.00 in the near-term and support within the 105.40-105.00 region. 

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