On Tuesday, USD / JPY reached the highest level of January 2017 around the mark of 116.34. This weakness is due in part to the strength of the US dollar and to the rising yields of the US treasury bonds that reached a high of 1.63% as investors considered that the Fed would raise interest rates sooner rather than later.

Yesterday, the Japanese yen was bouncing above the 21 SMA reaching the 116.15 area again. Now in the Asian session, we can see some selling below 116.00.

A factor that could limit that USD / JPY continues to depreciate and could exert downward pressure is the cautious sentiment about the stock markets. Consequently, investors want to take refuge in the Japanese yen.

USD/JPY is expected to consolidate below 116.00 in the next few hours. A technical correction could occur because on January 4, the eagle indicator reached the overbought zone at the critical point of 95-points.

This technical rebound seen yesterday could be an opportunity to sell again, targeting the 21 SMA located at 115.62. The support of 4/8 Murray could stop the fall, since the moving average of 21 is located at this same level and the yen could bounce above this area.

On the contrary, if the bearish pressure prevails and the pair breaks the key level of 115.65, the break of the uptrend channel is likely to be confirmed. Then, an acceleration of the downside move towards the level 3 / 8 Murray at 114.78 can be expected and the price could eventually fall towards the 200 EMA located at 114.31.

Support and Resistance Levels for January 06 - 07, 2022

Resistance (3) 116.58

Resistance (2) 116.31

Resistance (1) 115.96

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Support (1) 115.69

Support (2) 115.34

Support (3) 115.07

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Scenario

Timeframe 4-hours

Recommendation: sell below

Entry Point 116.00

Take Profit 115.60 (21 SMA), 114.84 (3/8)

Stop Loss 116.40

Murray Levels 116.40 (5/8), 115.62 (4/8), 114.84 (3/8)

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Alternative scenario

Recommendation: buy in case of rebound off

Entry Point 115.60

Take Profit 116.00, 116.40 (5/8)

Stop Loss 115.25

Murray Levels 114.06 (2/8) 113.28 (1/8)

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