USD/JPY Price Analysis: Strong resistance at 108.00

Guillermo Alcala FXStreet

USD/JPY rebound from 106.60 area has stalled below 108.00
The dollar faces resistance at the 50-day SMA and previous tops in the 108.00/05 area

US dollar’s mild rebound from the mid-range of 106.00 last week has been halted at 108.00, where the pair seems to be facing an important resistance area.

The USD/JPY picked up earlier this week, with the yen somewhat weaker amid a moderate recovery on risk appetite. Initial plans to ease coronavirus restrictions in the major economies have boosted hopes of an economic recovery which fuelled riskier assets against the safe-haven yen. The pair, however, has been unable to extend past 108.00, and it has remained practically flat over the last sessions.

The daily chart shows the USD/JPY limited below an important resistance hurdle around 108.00. The 50-day SMA, which capped the pair on May 11 and 12, lies now at 107.95 and right above it, there is the 61.8% retracement of the February-March decline concurring with mid and late-April tops at 108.00/05.

The dollar should break above that area to increase bullish momentum. In that case, the next targets would be the 100 and 200-days SMA’s around 108.30/40 on its way towards 109.38 (April 4 high). On the downside, immediate support lies at 107.30 (May 19 low) and below there, 106.60 (May 13 low) and 106 (May 6 and 7 lows).

USD/JPY daily chart

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

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