USD/JPY – Weak recovery struggling to take out 1-hr 50-MA

Despite a rebound in the USD/JPY from 100.71 (50% of 2011 low-2015 high) in the previous two trading days, the spot is having a tough time taking out 1-hr 50-MA positioned at 101.38 levels.

Dead cat bounce

The uptick appears to be a dead cat bounce, especially since the move lacks any fundamental support. US Fed rate hike bets remain low and there is little reason from Japanese side of the story for the weakness Yen. Hence, the up move appears chart driven. Moreover, dollar strengthened across the board in the NY session and that could have helped the pair.

The focus today is on the BOE rate decision as it could have a major impact on the overall market sentiment. Later in the day, US weekly jobless claims could influence overall demand for the US dollars.

USD/JPY Technical Levels

The spot remains around 101.30 in Asia. Acceptance above 101.38 (hourly 50-MA) would expose 102.05 (hourly 100-MA). A break higher could yield 102.83 (Aug 1 high). On the other hand, a breakdown of support at 101.00 would open doors for a re-test of 100.71 (50% of 2011 low – 2015 high), under which the spot may target 100.00 levels.