USD/JPY capped below 50-dma at 112.81, on track to test 200-dma, good to go short below 112.15
- USD/JPY is extending its slide in early Asian trade, hits fresh 7-day low near 112.17.
- The Bank of Japan in a surprise decision on Tuesday, announced that it cut its purchases of long-term Japanese government bonds by Y10 bn to Y190 bn.
- That said, the greenback still finds demand amid heightened expectations of another Fed rate hike in March, which could keep downside limited.
- Technically, the pair is trading with a bearish bias. Indicators on daily charts support more downside.
- RSI and Stochs are biased lower, while we see -ve DMI dominance and ADX is also rising, which is supportive on the downtrend.
- The pair is currently holding strong support at 112.18 (Jan 3rd low and 100-DMA), while upside remains capped below 20-DMA at 112.81.
- Next major support lies at 200-DMA at 111.69, while breakout above 50-DMA invalidates bearish bias.
Support levels – 112.18 (nearly converged Jan 3rd low and 100-DMA), 112, 111.69 (200-DMA)
Resistance levels – 112.74 (5-DMA), 112.80 (nearly converge 20 and 50 DMAs), 113
Recommendation: Good to go short on decisive break below 100-DMA, SL: 112.80, TP: 111.90/ 111.70/ 111.40
Source: FXWire Technicals