Buyers still holding on to key near-term levels
The pair encountered a strong rejection yesterday after meeting key technical resistance in the form of the upwards trendline (support-turned-resistance) and the 50.0 retracement level @ 147.96 - same levels mentioned two days ago here.
And as mentioned yesterday, the key risk driving the pair will be Brexit risks and we got a heavy dose of that following the row between Davis and May on the backstop plan. That blew over, and then the market decided to focus back on the trade rhetoric and emerging market woes - sending the yen higher as bonds rallied and equities slumped.
So, what's next for the pair?
As sentiment in the pair starts to favour the yen again, the key would be to watch for near-term levels. Looking at the hourly chart, buyers managed to keep a hold of the near-term bullish sentiment as the overnight lows failed to breach the 100-hour MA (red line).
That becomes the line in the sand for the pair now.
A breach below said level (now @ 147.07) and more importantly below the 147.00 handle will open up a further downside move and provide sellers with more incentive to drive the pair lower. That will be the key level to watch out for in trading today and on Monday - as there is the G7 summit to come today and tomorrow which may impact risk sentiment.
As we're now nearer to key levels to the downside, I'd favour a trade lower more than I would an upside move - as the highs are capped by the two key levels mentioned above. But if those two key levels give way, a trade higher would be rather attractive with the confluence of the 100 and 200-day MAs near 149.67 to be eyed next.
But keep in mind, a break of the 100-hour MA is much needed to justify a further move to the downside still.