USDJPY is showing a neutral picture in the medium term, trading within a broad range between 108.00 and 114.50 since March. The near-term bias is also neutral as the pair has been in a consolidation phase since mid-August and is pivoting around the key 110.00 level. This level is also the 50% Fibonacci retracement of the uptrend from 101.18 to 118.66 (November to December 2016 rally).
Momentum oscillators are moving sideways and highlighting the lack of direction in the market. RSI and MACD are also in bearish territory which suggest the immediate bias is tilted to the downside. The July 18 bearish crossover of the 50-day and 200-day moving averages also point to bearishness in the market.
The first support comes in the zone between 107.96 (61.8% Fibonacci) and the key 108.00 level. This is the lower end of the March-September range and a break to the downside would change the overall bias to bearish from neutral with scope to target 105.50.
USDJPY would need to clear 110.00 and break above the top of the recent range at 110.90 to weaken downside pressure. Breaking above the March-September top of the range at 114.49 could see another leg higher for a re-test of the December high at 118.66. From here, there would be increased odds for a resumption of the longer-term uptrend from November 2016.
For now, there is little momentum in the market and the neutral bias is expected to stay in place.
