USD/JPY hits 19-week low of 109.80 as USD sell-off continues across the board and treasury yields retreat from multi-year highs. Concerns that Sino-US trade row may escalate if communication between US and China breaks down keeps pressure on USD. Further, strong Japanese data adds support to the Japanese Yen weighing further on the major. Japan January Nikkei manufacturing PMI flash increased to 54.4 compared to 54 in the previous month. Technical indicators are bearish. The pair has broken major trendline support at 110.15 and has slipped below 61.8% Fibo. We see -ve DMI dominance and ADX is rising in support or trend lower. We see major support at nearly converged channel base & 100W SMA at 109.87, decisive break below will accentuate weakness.
Support levels - 109.87 (100W SMA & channel base), 109.54 (Sept 19 low), 109, 108.90 (78.6% Fib) Resistance levels - 110.15 (61.8% Fib retrace of 107.318 to 114.737 rally), 110.60 (5-DMA), 111.02 (50% Fib) 111.48 (Jan 18 high)
Good to to short on decisive close below 109.87, SL: 110.20, TP: 109.55/ 109/ 108.90.
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USD/JPY breaks below 78.6% Fib at 108.90, book partial profits, trail stop loss to 109.80, stay short for 108.30/ 108.15