USD/JPY Technical Outlook

The USD/JPY pair swung wildly in hectic Tue's session. Despite ratcheting fm 109.98 (AUS) to 109.60 in NY morning, price rallied in tandem with broad-based usd's rebound as well as rally in U.S. yields to 110.07 b4 easing.

On the bigger picture, dlr's fall fm 118.66 (Dec 2016) to 2019 low at 104.46 (Sep) confirms early uptrend fm 2016 29-month bottom at 99.00 has hit a top there. Despite hitting a 3-1/2 year bottom of 101.19 in Mar 2020 on risk-off trades due to COVID-19 pandemic, dlr's rally to 111.71 the same month signals correction over. Despite dlr's erratic fall to 102.60 (Jan 2021), subsequent rise to 116.65 at the start of Jul signals pullback is over n as price has risen from 108.73 in early Aug to 110.79, re-test of 111.65 is envisaged but abv needed to head twd 2020 112.22 peak. Having said that, dlr's drop fm 110.79 in Aug would bring choppy swings, below 108.73 yields fall 108.35, break extends twd 107.49.

Today, Tue's impressive gain fm 109.60 to 110.07 n intra-day brief break abv there n rising hourly indicators suggests re-test of last week's 110.26 high would be seen, break would head back twd Aug's peak at 110.79. Therefore, trading fm long side is favoured n only below 109.60 risks weakness twd 109.42.