USD/JPY: Extended weakness on a break below 112.62 support line – DBS Bank

USD/JPY has reversed lower from a recent 115.52 high. A sustained decline under 112.62 opens the downside towards 110.58 as technical indicators remain overbought with trend intensity picking up momentum, Benjamin Wong, Strategist at DBS Bank, report.

Stay patient and allow the market to do its correction

“Given intermediate trend support pegs 112.62, USD understandably pushed back higher from Tuesday’s 112.53 lows. At this stage, there remain many moving parts on the omicron risk event. On the daily charts, trend intensity is growing and the technical indicator still guides us that USD has yet to see a fullersized correction.”

“Firm resistance is now lowered to 104.02 and for USD/JPY to negate this corrective pressure, a sustained break over 114.78 is required.” 

“A 38.2% Fibonacci retracement of the entire rally range of 102.59-115.52 calibrates support at 110.58. Just a stone throw from 200-day moving average (DMA) of 110.49.”