The pair is consolidating on Thursday after falling 2.02% the previous day, on the biggest one-day fall since 29 July 2016.
Strong pressure on the dollar from political situation in the US that also strongly increased demand for safe-haven instruments, resulted in yesterday’s crash of USDJPY pair.
Technical studies are turning into bearish setup after fall and shift near-term risk lower.
Solid support lies at 110.50 (Fibo 61.8% of 108.11/114.36 rally) where the pair found temporary footstep, however, today’s consolidation remains capped by broken base of falling daily cloud at 111.39 and risk on retest of 110.50 handle remains in play.
Break below here would trigger large stops below and spark further weakness towards psychological 110.00 support and 200SMA at 109.70.
On the other side, strongly oversold slow stochastic on daily chart suggests correction, but no firmer bullish signal seen so far as the indicator continues to point south.
Stronger bullish signals could be expected on violation of daily cloud base which would sideline persisting downside threats.
Extended consolidation between 110.50 support and cloud base would be likely near-term scenario.
Res: 111.00; 111.23; 111.39; 111.77
Sup: 110.50; 110.00; 109.85; 109.70