USD/JPY: Steeper drop on a break below 105.50

The dollar is down across the board as the market kick-start the week with a positive mood whit the USD/JPY pair trading lower within range in the 105.70 price zone. Technically, dollar/yen is bearish although the directional momentum is limited, FXStreet’s Chief Analyst Valeria Bednarik informs.

Key quotes

“The positive mood is being underpinned by news that the US FDA approved the use of plasma from recovered coronavirus patients as a treatment for hospitalized patients. The macroeconomic calendar had nothing relevant to offer overnight, and will remain so during the US session as the country will only release the Chicago Fed National Activity Index for July, foreseen at 2.73 from 4.11 in the previous month.”

“The USD/JPY pair is biased lower according to intraday charts, although the bearish momentum is limited. It topped at 105.91, the immediate resistance. In the 4-hour chart, it is currently below a still bullish 20 SMA, while technical indicators remain within negative levels with uneven bearish strength.” 

“The pair has an immediate support area around 105.50, with a steeper decline expected once below it.”