USD/JPY muted short-sellers near 111.70 handle; bulls 'saved by bell' aka Trump

Currently, USD/JPY is trading at 112.80, up +0.78% or 88-pips on the day, having posted a daily high at 112.86 and low at 111.73.

The American dollar vs. Japanese yen traded over the edge over 4-consecutive trading sessions as short-sellers pushed as much as they could to break the pair balance near 111.50. Furthermore, the absence of robust results on the economic front left the US dollar vulnerable to any bearish pressure. 

Although Japan echoed a 'no problem' if the exchange rate were to move as low as 100, the awful truth when it comes to market dynamics based on the country's exports wouldn't allow such crash without a strong risk-off or Black Swan event. As of writing, the pair exploded 40-pips to the upside and accumulated 120-pips from today's low at 111.73.

Historical data available for traders and investors indicates during the last 6-weeks that USD/JPY pair had the best trading day at +1.76% (Jan.18) or 201-pips, and the worst at -1.65% (Jan.05) or (190)-pips.

USD/JPY a drop to 111.30 remains on the cards – UOB

Technical levels to consider

In terms of technical levels, upside barriers are aligned at 113.94 (high Feb.1), then at 114.98 (50-DMA) and above that at 116.85 (high Jan.11). While supports are aligned at 111.58 (low Feb.7), later at 110.06 (100-DMA) and below that at 107.20 (200-DMA). On the other hand, Stochastic Oscillator (5,3,3) seems to move away from the oversold territory and head north. Therefore, there is evidence to expect further US dollars gains in the near term. 

On the long term view, if 118.59 (high Jan.1) is in fact, a medium-term top, the upside seems limited for the pair at 115.55 (short-term 61.8% Fib). Also, 112.37 (short-term 50.0% Fib) would become another resistance level if prices open and close below it. To the downside, supports are aligned at critical 111.64 (long-term 50.0% Fib), then at 109.19 (short-term 38.2% Fib) and finally below that at 105.26 (short-term 23.6% Fib). 

USD/JPY Forecast: 61.8% Fib ext. support holds despite drop in T-yield, rally ahead?