USD/JPY: Deeper retracement in the near-term still possible

USD/JPY regains some upside traction following Tuesday’s pullback as selling pressure is expected to subside on a breakout of the 200-day SMA, Pablo Piovano from FXStreet apprises.

Key quotes

“Persistent concerns around the Chinese coronavirus and the impact on global growth keep investors’ sentiment well depressed and pave the way for a deeper retracement in the near-term, all on the back of firm demand for the safe havens.”

“Following the Fed’s move on rates, further easing either by the Fed or other central banks cannot be ruled out, leaving the outlook for the pair somewhat mixed and with the next relevant support in the mid-106.00s.”

“USD/JPY broke below the September low at 106.96 on Tuesday and in doing so it has facilitated a potential visit to the October 2019 low in the 106.50 region in the next weeks.”

“On the upside, the pair needs to regain the 200-day SMA, today at 108.37, in order to allow for extra gains and open the door to a return to the 110.00 neighourhood. While below this area, occasional bullish attempt should be seen as selling opportunities. ”