USD/JPY has slipped back under 156.00 in European morning trade, with the downside momentum since last week's sharp drop still largely intact. Price action remains below both the 100-day and 200-day moving averages, and traders are now watching whether the 155.00 level holds.
Pair slumps again after a volatile Friday
USD/JPY is now down 0.4% to 155.60 as the new week gets underway, with the pair looking heavy once more. Traders are still digesting last week's sharp drop, even after some dip-buying emerged on Friday following the US jobs report.
The non-farm payrolls data came in hot, which briefly lifted the dollar, but that reaction was quickly reversed. USD/JPY then whipsawed from a high of 156.75 to a low of 155.35 in about half an hour, capping a volatile end to the week.
Bearish technicals, but dip buyers hold the line
The new week brought more of the same. The pair initially tested waters above 156.00, touching a high of 156.27 earlier in the session, before a sudden slump in the past hour dropped it to a low of 155.60.
The downside momentum since last week's drop is still largely intact, and price action now sits well below both moving averages, pointing to a more bearish bias. Still, dip buyers are not throwing in the towel just yet. Key daily support from the end-April to early-May lows near 155.50 is holding, with the psychological 155.00 level seen as the next line of bids.
The 155.00 level is the key risk
A break below 155.00 would give sellers fresh legs to extend the downside run, with the next target near the January and February lows around 152.00-25. Hold that line, though, and dip buyers have a shout at working toward a rebound.
As for risk events this week, none is bigger than the US CPI report on Friday, which sets up the final test for markets ahead of next week's Fed decision. For now, the focus for USD/JPY rests squarely on the battle around 155.00.
Source: Investinglive
Trading involves risk.
Risk Disclaimer
