USDJPY bounces back above 109 but overall outlook remains bearish
The pair bounces from session low at 108.45 on Tuesday, after extension of Monday’s strong fall threatened key near-term support at 108.28 (26 Jan low).
Strong bearish acceleration on Monday came after repeated failure to clear important double-Fibo barriers at 110.26/32 (Fibo 61.8% of 111.48/108.28 and Fibo 38.2% of 113.63/108.28) which heavily weighs on near-term action.
Fresh weakness was triggered by strong fall in global equities which boosted yen’s safe-haven appeal in fresh risk-off action.
Bounce off 108.45 low extended above 109 handle and is seen as hesitation ahead of 108.28 pivot but also as positioning for renewed attack at 108.28 target.
Falling 10SMA (109.25), which so far capped recovery attempts, along with Fibo 38.2% of 110.48/108.45 bear-leg, should ideally keep the upside limited, to keep immediate bears intact.
However, stronger upticks cannot be ruled out and expected to stall under the top of thick hourly cloud (109.84).
Overall outlook remains bearish and favors further weakness, with eventual break below 108.28 pivot to open psychological 108.00 support and unmask key med-term support at 107.31 (08 Sep low).
Alternative scenario requires firm break above 110.00 barrier (falling 20SMA) and cracked Fibo resistances at 110.26/32, to neutralize bears and shift focus higher.
Res: 109.31; 109.47; 109.70; 110.00
Sup: 109.00; 108.45; 108.28; 108.00