- USD/JPY attracted some dip-buying near the 107.00 mark and rose to near two-week tops.
- Some follow-through buying should now pave the way for a move beyond the 108.00 mark.
- Sustained weakness back below the 107.00 level will negate prospects for additional gains.
The USD/JPY pair edged higher through the mid-European session on Monday and shot to near two-week tops, around the 107.40-50 region in the last hour.
The positive move on the first day of a new trading week comes on the back of last week’s breakthrough the 23.6% Fibonacci level of the 109.85-106.08 downfall. The mentioned region now coincides with 200-hour SMA and should now act as a key pivotal point for short-term traders.
Meanwhile, the emergence of some dip-buying ahead of the mentioned confluence region, around the 107.00 mark, supports prospects for additional gains. A subsequent move beyond the 107.40-50 congestion zone (nearing 38.2% Fibo. level) will further add credence to the positive outlook.
The pair might accelerate the momentum and aim to reclaim the 108.00 round-figure mark en-route the next major hurdle near the 108.35-40 region. The latter comprises of the very important 200-day SMA and the 61.8% Fibo. level, which if cleared decisively should pave the way for a further move up.
On the flip side, the 107.00 round-figure mark now becomes a strong base for the pair. That said, a convincing break below might negate the constructive set-up and turn the pair vulnerable to fall back towards challenging monthly lows, around the 106.00 mark set last Tuesday.
USD/JPY 1-hourly chart
Technical levels to watch