USDJPY Price Analysis: Remains below 50% Fibo./100-day SMA confluence support breakpoint

• USDJPY struggles to capitalize on its modest intraday gains amid renewed USD selling bias.
• Failures ahead of the 140.80-141.00 confluence support breakpoint favour bearish traders.
• Acceptance below the 61.8% Fibo. level should pave the way for further near-term losses.

The USDJPY pair gains some positive traction on Wednesday and moves further away from its lowest level since August 29, around the 137.65 area touched the previous day. The intraday uptick, however, falters near the 140.30 region, dragging spot prices back closer to the mid-139.00s during the first half of the European session.

The overnight US Dollar recovery move from a three-month low fades rather quickly amid easing fears of any further escalation in tensions between Russia and the West. The initial findings suggest that the missile that hit Poland on Tuesday may have been fired by Ukraine at an incoming Russian missile. This, along with rising bets for smaller rate hikes by the Federal Reserve, continues to act as a headwind for the greenback.

That said, a modest uptick in the US Treasury bond yields could help limit any further downfall for the buck. Furthermore, signs of stability in the financial markets seem to undermine the safe-haven Japanese Yen and lend some support to the USDJPY pair, at least for the time being. That said, the lack of any follow-through buying warrants some caution for bullish traders and before positioning for any meaningful recovery.

Even from a technical perspective, the post-US CPI breakdown below the 141.00-140.85 confluence favours bearish traders. The said area comprises the 100-day SMA and the 50% Fibonacci retracement level of the August-October rally, which should now cap the upside for the USDJPY pair. Some follow-through buying beyond the 141.00 mark, however, might trigger a short-covering rally and lift spot prices back towards the 142.00 round figure.

On the flip side, any subsequent slide below the 139.00 mark might continue to find decent support near the 61.8% Fibo. level, around the 138.70 region. A convincing break below the 138.50-138.45 area will make the USDJPY pair vulnerable and expose the 138.00 mark. Spot prices might eventually aim to restest the overnight swing low, around the 137.65 zone.

USDJPY daily chart

Key levels to watch