USD/JPY (current price: 101.05)
The pair continued lower as expected as it broke below Friday’s low to trade below the 101.50 support for the first time since the end of June. The cross is now possibly headed to a re-test of the prior low at 98.50, with the lower boundary of the long-term declining channel also providing support slightly below that level. A strong resistance level lies ahead at 103.50, and the 200-day MA is still well above the current rate near 112 currently. The pair is now 600 pips lower since the release of the hawkish BOJ statement last week.
Our assessment: USD/JPY is still trading in a well-defined bearish trend channel after breaking out above it slightly two weeks ago, as the Yen might continue to be among the strongest currencies in the coming weeks.
