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USD/JPY Outlook: Pullback So Far Limited But Risk of Deeper Correction Exists

The pair pulled back from new multi-month high at 112.22 after bulls faced strong headwinds on approach to strong barriers at 112.40/41 (24 Apr 2019 high/50% retracement of 125.84/98.99 fall).

The 70-pips pullback was so far rejected at 111.48, above pivotal Fibo support at 111.24 (38.2% of 109.65/112.22 upleg) but the downside remains at risk as daily indicators (RSI and stochastic) are overbought and start to reverse, while strong bullish momentum is fading.

Also, profit-taking after strong rally (the biggest weekly gains since mid-July 2018) may increase pressure on the pair.

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Extended dips should be contained above broken Fibo barrier at 110.52 (76.4% of 112.40/104.44) to signal consolidation ahead of fresh advance and keep larger bulls in play.

Res: 112.22; 112.40; 112.66; 113.17
Sup: 111.61; 111.48; 111.24; 110.92