USD/JPY is weakening as risk aversion increases, according to George Davis, Chief FIC Technical Analyst at RBC Capital Markets.
Davis says to watch key uptrend support at 111.61 as a break below this level would trigger a trend reversal and open up the 110 area (see Chart). He notes that momentum, as measured by the trend in RSI, has already turned bearish.
For now – until the 111.61 level is breached – Davis’s one to three-month target for USD/JPY remains at 114.50, which is just below the triple top level of 114.73. Initial resistance can be found at 113.05 and 113.52.