On Wednesday, the USD/JPY currency pair tested the upper boundary of the short-term descending channel near 107.85. During today’s morning, the pair reversed south from the given line.
From a theoretical point of view, it is likely that some downside potential could prevail in the market, as the exchange rate should target the lower channel line located in the 107.25 area.
If the given channel holds, it is likely that a reversal north could follow. Otherwise, the currency pair could target the psychological level at 107.00.
Also, it is unlikely that some upside potential could prevail in the market due to the resistance formed by the 55-, 100– and 200-hour SMAs, as well the weekly PP in the 107.70 area
