Early Monday’s action was so far in green as last week’s multiple downside rejections above key supports at 110.64 (50% of 108.11/113.17) and 110.57 (rising 55SMA), generated initial recovery signal.
However, the downside is still vulnerable as momentum is weak and the pair was so far unable to clearly break above 30SMA (111.08).
Stronger acceleration higher and break above pivots at 111.47 (20SMA) and 111.57 (Fibo 38.2% of 113.17/110.58 bear-leg) are needed to generate stronger recovery signal.
The pair may hold within congestion that extends into fourth straight day, awaiting BoJ policy meeting, due early Tuesday, which may provide further signals.
The central bank is expected to maintain its ultra-low interest rates but speculation about considering changes to its massive asset-purchase program may generate stronger direction signal.
Res: 111.16, 111.47, 111.57, 111.88
Sup: 110.89, 110.58, 110.07, 109.99
