USD/JPY door open for a test of 109.90? – Commerzbank

The recent price action around USD/JPY prompts the idea of a potential test of the 109.90 area, noted Karen Jones, Head of FICC Technical Analysis at Commerzbank.

Key Quotes

“USD/JPY has started to erode the 38.2% retracement at 111.98 area and the 112.02 April high, this suggests scope to the base of the cloud, which lies at 109.92 and, if seen, we look for this to hold (this is also the 50% retracement of the move up from November). However we also note that the recent move lower continues to indicate that this is the end of the corrective move (this is the case on all the intraday charts as well), we also note the daily RSI has not confirmed the move lower”.

“Initial resistance lies at 115.10 (imoku 2) and this will need to be regained in order to alleviate downside pressure and reintroduce scope to key short term resistance offered by the 16 month resistance line at 118.15”.