The pair’s attempt to edge higher on Friday was disrupted by the combined resistance of the monthly S1 and the 55-hour circa 111.40. As a result, the Greenback fell even lower and thus had reached 110.60 by early today.
It is likely that the pressure continues to affect negatively the US Dollar . A possible fall, however, should not be massive due to a notable support cluster being located nearby circa 110.20.
Meanwhile, it is unlikely that the 55-hour is breached in this session, thus leaving the rate somewhere in the 110.40/111.20 area by Tuesday.
The bearish pressure continued to prevail on Monday, thus sending USD/JPY towards the combined support of the monthly S2 and the weekly S1 circa 110.30.
Due to this cluster, the Greenback failed to reach the bottom boundary of a four-month channel circa 109.80. The test of this support was followed by a slight period of recovery until the rate reached the 55-hour SMA.
Technical indicators suggest that the rate is likely to fail today, especially if its northern barrier is likewise reinforced by the 100-hour moving average. Even if the rate breaches the 110.30 area, its subsequent fall should not exceed the aforementioned channel.
The pair’s movement would eventually lead to the breakout of a short-term descending channel and a possible surge.
Considering that the rate has surpassed the 55-hour SMA, it could signal to further advance. This upside momentum, however, could be stopped by the 100-hour SMA—a level which was being tested at the time of this analysis. It is likely that both barriers confine the Greenback for several hours.
Meanwhile, technical indicators are still in favour of a fall. In case this scenario is to occur, losses should be capped near the lower boundary of a four-month channel down and the 23.6% Fibo retracement near the 109.00 mark.