- USD/JPY staged a goodish rebound from sub-105.00 levels amid resurgent USD demand.
- The set-up favours bullish traders and supports prospects for additional near-term gains.
- A move towards the 105.70 region, en-route the 106.00 mark, looks a distinct possibility.
The USD/JPY pair showed some resilience below the key 105.00 psychological mark and staged a modest recovery from one-and-half-week lows set earlier this Tuesday. The pair, for now, seems to have snapped four consecutive days of the losing streak, albeit lacked any strong follow-through buying.
A goodish US dollar rebound from six-week lows was seen as a key factor that extended some support and assisted the pair to gain some positive traction. However, a turnaround in the global risk sentiment underpinned the safe-haven Japanese yen and kept a lid on any further gains for the USD/JPY pair.
From a technical perspective, the recent positive move from multi-month lows touched in January has been along an upward sloping channel. The formation points to a well-established short-term bullish trend, which, along with the emergence of some dip-buying, supports prospects for a further appreciating move.
The constructive outlook is reinforced by the fact that technical indicators on the daily chart are still holding in the bullish territory. Hence, a subsequent strength back towards an intermediate hurdle near the 105.70 horizontal zone, en-route the 106.00 round-figure mark, now looks a distinct possibility.
On the flip side, the 105.00-104.90 region (ascending channel support) should continue to protect the immediate downside. A sustained breakthrough will negate the near-term bullish bias and prompt some aggressive technical selling, turning the USD/JPY pair vulnerable to slide back towards the 104.40 area.
The downfall could further get extended towards the 104.00 round-figure mark before the USD/JPY pair eventually drops to the 103.45 support area. The next relevant downside target would be the 103.00 round-figure mark ahead of YTD lows, around the 102.60-55 region touched on January 6.