Key support has been removed for USDJPY and this turns the risks back lower in both the short- and medium-term, says David Sneddon and his team at Credit Suisse in London.
Sneddon says that USDJPY’s collapse on Tuesday took out key support at 110.32/21, which was a combination of: The 200-day moving average; a possible uptrend from November; and the May low. He thinks the next target is likely to be 108.72, then the April low at 108.13 (see Chart).
While Sneddon thinks the 108.13 level is likely to hold at first, if removed he thinks USDJPY could fall as far as the July 2016 high at 107.50, and then the 61.8% retracement of the June to December 2016 rally and potential uptrend from September 2016 at 106.52/50.
Sneddon says resistance is seen at 109.74 with 110.24/52 acting as a cap to keep the risks lower.