USD/JPY Technical Analysis: Off lows, but bulls not out of the woods yet

• USD/JPY has recovered from session lows on reports stating no or very few US casualties in Iran attack. 
• The bid tone around yen has weakened on hopes of de-escalation of US-Iran tensions. 
• A break above 108.63 is needed to confirm an immediate bullish reversal. 
• Weekly chart indicators are biased bearish.

USD/JPY has recovered from session lows on hopes of de-escalation of US-Iran tensions, however, it is too early to call a bullish reversal, as the lower highs setup is
still intact. 

At press time, the pair is trading at 108.14, having hit a session low of 107.64 an hour ago. 

The immediate outlook would turn bullish if the spot rises above 108.63, invalidating the bearish lower highs setup on the 4-hour chart. 

A move above 108.63 would also add credence to the bullish divergence of the 4-hour chart relative strength index and will likely fuel rise to levels above 109.00. 

The overall outlook, however, will remain bearish as long as the pair is holding below 109.70 on the weekly chart. 

In fact, the weekly chart indicates the pair could test support near 106.50 in the next few weeks. Notably, the weekly relative strength index has dipped into a bearish territory below 50 and the weekly MACD is about to cross below zero, confirming a bullish-to-bearish trend change. 

4-hour chart

Trend: Bearish

Technical levels