Credit Suisse discusses USD/JPY technical outlook and sees a scope for a move lower towards 104.19 if the 55-day average around 106.39/56 keeps capping in the near-term.
"USDJPY strength ha s been capped at the 55 -day average and recent high at 106.39/56 as expected and we continue to look for the risk to move lower again. Immediate support moves to 105.61/60, below which should see a move back to the recent lows at 105.20/10 and with the potential uptrend from the 2020 low seen not far below at 104.99, we would look for a fresh hold here at first. Below in due course though can see the completion of a bearish continuation pattern for a resumption of the broader downtrend, with support then seen back at the 104.19 low of July," CS notes.
"A closing break above 106.56 stays needed to ease the immediate downside bias for a retest of 106.95/107.06 – the August highs, 38.2% retracement of the fall from late March and 50% retracement of the fall from June – but with this expected to remain a more solid barrier," CS adds