USD/JPY: within a lower range between 105.50/50
- USD/JPY: bears remain in control within lower target range.
- USD/JPY: bulls above descending resistance.
USD/JPY is currently consolidating above the descending resistance line formed within last week's southerly channel from 108.80 with the price sideways around the 50 hr SMA at 106.27.
USD/JPY has been in a sharp free-fall this month on dollar weakness, prospects of higher inflation and in uncertainty over the US economy that subsequently ignited the stock market rout creating a flight to safety. This has all left the pair still below 61.8% of the 2016 rise at 106.50 and in a lower range between there and 105.50.
BoJ Gov Kuroda was reappointed
Meanwhile, the new BOJ leadership has been announced. BoJ Gov Kuroda was reappointed, as expected and Amamiya/Wakatabe were selected at Deputy Governors. Analysts at Nomura believe the new leadership will be more dovish than the current leadership:
"Our main scenario is that the Bank will maintain its current policy framework, with the 10yr yield target around 0%, and we think market interest is mainly focused on the possibility of a BOJ tightening. However, the new BOJ leadership may take a fresh look at the policy framework. There is also financial market turbulence and JPY appreciation, which may weaken positive momentum towards the inflation goal."
Market wrap: US dollar recovers some lost ground - Westpac
USD/JPY levels
The pair maintains its bearish bias according to technical readings in the daily chart, as the price continues moving away from its 100 and 200 DMAs, both over 500 pips above the current level.
Valeria Bednarik, chief analyst at FXStreet explained that the 4 hours chart shows that the price holds well below bearish moving averages, with the 100 SMA currently around 108.65, too far away to be relevant short term:
"The Momentum indicator lost upward strength well into negative territory, while the RSI aims to recover from oversold readings, currently at 35, all of which maintains the risk toward the downside. Poor US housing data could see the pair resuming its decline, with a break below 106.00 leading to an extension toward the 105.00 region for later in the day,"