Odds of September hike lower
The USDJPY has tumbled after the headlines from the Yellen testimony. The yield on the 2 and 10 year are trading at the lows (down -3.6 bp and -4.6 bps respectively). The odds of a September hike have been lowered (around 50-50 now vs around 60-40).
Technically, the price of the USDJPY today fell below the 100 hour MA in the Asian session (blue line at 113.833 now), but was finding support buyers against the 200 hour MA (green line at 113.392) during the London morning session. The price action off the Yellen comments, has pushed the price below the 200 hour MA at the 113.39 level. That level is now risk for shorts looking for more downside. The price has tumbled lower.
The low price has moved to 113.00 - a nice natural support level. The 50% of the move up from the June 30 low comes in at 113.10. The price is currently trading between those two levels. Stay below is more bearish. Move above and the shorts start to wonder.
A move below the 113.00 level will have traders looking toward the 112.778 area. The 61.8% of the move higher comes in at the level.
PS the pair just moved below the 113.00 level.
Taking a broader view by looking at the daily chart, the pair moved to the highest level since March 15th yesterday - taking out the May highs at 114.36 in the process (the high reached 114.49). That break failed. The decline has been rather modest in the grand scheme isince that failure. The traders followed the clues from the hourly chart mainly (trend line, 100 hour MA, 200 hour MA breaks).
Back to the daily chart, the price has move up from a June low of 108.788. At the beginning of the month, the pair broke above a topside trend line and ran higher to the failed test of the May high.
Now that the price has started to decline, the 38.2% of the move higher and the underside of that broken trend line comes in at 112.31 area. That would be a target area on continued weakness now. I would expect that level to be a tough nut to crack on a test.
So sellers are taking more control. There is some consolidation around the 113.00 level. The 112.778 is the next downside target. The 112.31 area is stronger support.