Societe Generale Research discusses USD/JPY technical outlook and flags a daily hammer pattern, suggesting a scope for limited rebound ahead of the recent peak at 108.81/108/92.
"USD/JPY is rebounding after almost meeting an interim objective for the down move at 106.58/45, representing the 76.4% retracement from April. The pair has formed a daily Hammer at those levels suggesting possibility of an initial rebound.
However daily Stochastic continues to remain below the 25%-mark denoting a large recovery may not materialize. 107.55/80, the 38.2% retracement from the highs formed earlier this month and the daily descending channel at 108.10, also the 23.6% retracement from April should be immediate hurdles. Recent peak at 108.81/108.92 should contain upside," SocGen notes.
"In the event of persistence in down move, the trend since 2016 at 106/105.95 and multiyear triangle lower bound near 104.55/103.58 will be next support levels," SocGen adds.