Sell-offs in global stock market yesterday gave strength to yen as demand of safe-have increased.
Yen surged thanks to the comment of Japanese Prime Minister Shinzo Abe, who told the Wall Street Journal that countries should not try to weaken their currencies with so-called “arbitrary intervention”. Yoshihide Suga, the Japanese Chief Cabinet Secretary said that the Japanese government will watch the foreign exchange market with a “sense of urgency”.
USD/JPY remains under pressure. 20 MA and 50 MA are still falling on hourly chart and the price currently is moving below those MA’s. The price is falling from the Fibonacci resistance area at 110.481-110.818, approaching the intraday key support area at 109.936. The strengthening of the yen may continue if the price managed to break the key support, with 109.548 as target and 109.223 in extension.
Note that hourly stochastic is oversold, following the hourly CCI. It indicates that the market could be in oversold condition so that another pull-back is possible. In that case, as alternative scenario watch for bearish signal confirmation on a pull-back move to within the Fibonacci resistance area with target at 110.273 or 109.936 in extension.
Be careful if the price managed to break the resistance at 110.818 because it will turn the intraday bias to bullish and possibly will be followed by a bullish move up to 111.058-111.363.