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USD/JPY Outlook: Fresh Weakness Needs Confirmation on Close Below Key Fibo Support at 106.87

The pair accelerated lower in early US session on Tuesday, dragged by dollar index’s breach of key near-term support, with weakness also being fueled by strong risk appetite in the market.

Triggering stops at 107 zone also contributed to the weakness, with bearish signal generating on daily chart as bulls got trapped above 55DMA.

Long upper shadows on daily candles in past one week suggest that the upside is well protected that shifts near-term focus lower.

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Fresh bears need eventual close about cracked key Fibo support at 106.87 (61.8% of 106.07/108.16 upleg) which so far resisted several attacks, to further weaken near-term structure and expose target at 106.56 (Fibo 76.4%).

Caution on failure to close today below 106.87 that would signal that range trading is continuing.

Res: 107.12; 107.27; 107.40; 107.51
Sup: 106.80; 106.63; 106.56; 106.07