USD/JPY Price Analysis: Testing trendline support at 107.30/40

• USD/JPY rally halts at 108.15 and the pair retreats to 107.30
• The dollar is testing trendline support at 107.30/40 area.

The US dollar has wrapped up a five-day rally that pushed the pair to three-week highs at 108.15 and has depreciated about 0.4% on Wednesday, to test the near-term trendline support, now at 107.30/40.

Investor’s concerns about the growing numbers f coronavirus infections and the potential damage of a second round of lockdowns in the major economies seem to be favouring the safe-haven yen. Furthermore, the fears about a new episode on the Sino-US tensions after Beijing passed the controversial security law in Hong Kong, has hurt risk sentiment, buoying demand for the JPY.

At the moment, the pair moves around the mid-range of 107, right above the upward trending support line, now at 107.40. A clear move below here might boost bearish pressure, pushing the pair towards 107.18, the confluence of the 50 and the 100 SMAs in the 4-hour charts, before 106.80 (Jun. 26 low).

On the upside, the pair should rise beyond the 200 SMA, at 107.60 to attempt session high at 108.20 and then 108.50 (intra-day level).

USD-JPY 4-hour chart

USD/JPY key levels to watch