USD/JPY: Off lows, but still below the key rising trendline

• USD/JPY recovered losses, possibly due to an uptick in Asian stocks.
• However, the pair is still trading below the key ascending trendline.

The USD/JPY pair has recovered losses and now trades largely unchanged on the day at 109.37, but still below the key ascending trendline, sloping upwards from the March 26 low and April 18 low.

The spot has failed twice to cut through 110.04 (61.8 percent Fibonacci retracement of Jan-Mar drop) this month and hence it appears the pair is creating a double top reversal pattern with the neckline support of 108.65.  

The rejection at the key Fibonacci hurdle could be associated with the US 10-year treasury yield's failure to rise above the 3 percent mark in a convincing manner.

At press time, the 10-year yield is flat-lined around 2.96 percent. Still, the spot has recovered from the session lows, possibly due to the rise in the Asian stocks to near-two month highs -  MSCI’s broadest index of Asia-Pacific shares outside Japan increased 0.4 percent. 61.8 percent Fibonacci

The data docket is thinner today, hence the spot would be at the mercy of the action in the treasury yields and the stock markets.

USD/JPY Technical Levels

The 5-day moving average (MA) and the 10-day MA is moving in a sideways manner, indicating the pair lacks a clear bias for now. The RSI is also going sideways.

Key resistance: 110.04 (61.8 percent Fibonacci retracement of Jan-Mar drop), 110.16 (200-day MA), 110.48 (Feb. 2 high).

Key support: 108.65 (May 4 low), 108.49 (100-day MA), 107.91 (Feb. 21 high).