USD/JPY likely to test 106.20

Following a breakout of the descending channel early on Friday, the US Dollar entered a minor period of consolidation against the Yen.

This neutral sentiment changed during the Asian session when the pair fell 50 pips in response to various fundamental events. Some downside potential still exists in the market today; thus, the pair could decline down to the 100– and 200-hour SMAs and the upper boundary of a three-month descending channel near 106.20. Given that no significant fundamentals are scheduled for this session, the US Dollar is unlikely to breach this support.

On the other hand, in case of a strong bullish momentum, gains should be capped near the 107.50 mark where the weekly R1 and the monthly PP are located.



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