Last week's USD/JPY plunge below 2018-2019 lows in the 104.00s on coronavirus risk aversion broke the neckline of a head-and-shoulders top formation dating back to 2013, by 105.50, before rebounding off the November 2016 pre-Trump election rally low at 101.19.
The recovery to 107.56 today has run into resistance by the January lows USD/JPY broke below in February and the weekly cloud base at 107.65/66.
If it can't clear those hurdles this week and instead closes below the long-term neckline at 105.55 after whatever further fiscal, regulatory and monetary policy bulwarks are announced to offset the virus's economic impact this week, last week's 101.18 low will remain in the frame.
The Fed has already cut rates to zero, while the BOJ demurred from going deeper into negative today nL1N2B90M9, keeping 10-year Treasury-JGB yield spreads near eight year lows that were then associated with USD/JPY prices near 78.
Japanese intervention, whether through MOF or GPIF, might limit yen gains to the 99-101 region if the U.S. fiscal stimulus and broader Fed asset back-stops fail to stabilize financial markets.
The cleansing of IMM net spec USD/JPY longs into last week's 101.18 spike low at least cleared out sell stops that fueled last week's dive.