USD/JPY Cracks Strong Support on Fresh Weakness Driven by Trade Fears

Technical analysis of Forex market

Fresh trade fears pushed the dollar lower to crack pivotal supports at 111 zone in early US session trading on Tuesday, following the latest threats of US President Trump on imposing tariffs on imports from the EU, just a day after US officials proposed a list of EU products to target, in extension of existing dispute in aircraft industry.

Trade concerns weakened dollar across the board as traders switched to less risky yen until get clearer picture. Violation of strong supports at 111 zone 20SMA/Fibo 38.2% of 109.71/111.82/100SMA/converged Tenkan/Kijun-sen) would signal further weakness on clear break, however, a massive daily cloud (top of the cloud lays at 110.78) offers very strong support. This marks the key point and focus will be on today’s closing, as break and close below cloud top would generate fresh negative signal for extension of pullback from 111.82 high. Rejection above cloud top and close above 111 zone is needed to keep broader bulls in play for fresh attempts higher. Broken 200SMA (111.47) marks key barrier, close above which is needed to confirm an end of corrective phase.

Res: 111.20; 111.47; 111.58; 111.82
Sup: 110.98; 110.78; 110.68; 110.51

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