In the wake of Tuesday’s broad dollar selloff, USD/JPY has recovered some of its losses.
The bounce can likely thank some de-risking tied to U.S.-China angst nL3N2ET1XV, but also just mean reversion within this week's 107.57/6.68 EBS fall.
However, strength looks likely to top out near 107.23 hurdles.
The drag on USD/JPY from Tuesday's dollar index fall in response to the EU rescue fund deal nL2N2ES1AW has evaporated, and become much more focused on euro and high beta currency gains.
That's left USD/JPY to center itself within its 106.635-7.57 range, in play since the July 10 low and this week's high.
The 107.23 target is the 61.8% Fibo of this week's slide, the 30-day moving average and 161.8% Fibo projection off Tuesday's base.
The 50% Fibo at 107.12 and the daily kijun and tenkan lines at 107.12/10 are on-close pivot points.
Weekly kijun and tenkan lines at 106.70/7.96 remain the weekly on-close pivot points.
The kijun is quite close to Tuesday's 106.68 low, while buttressing July's 106.635 trough is the lower 30-day Bolli, last at 106.63.
With Japan on holiday Thursday and Friday, and little major U.S. economic news until Friday, save for claims, mean reversion trading may prevail.
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