Economists at Credit Suisse see an elevated risk that USD/JPY suffers a deeper corrective setback to the 38.2% retracement of the October rally at 113.08/00. But with a major base in place, they continue to view any weakness as corrective only.

Support remains seen at 113.41/39, then 113.08/00

“We see an elevated risk of a slightly deeper corrective setback and a close below 113.41/39 would warn of a fall to 113.29/21, with the 38.2% retracement of the October rally at 113.08/00 then ideally holding. Should weakness directly extend, we would see support next at 112.23 and then more importantly at 112.08/00.” 

Whilst 113.41/39 holds, a deeper corrective setback can be avoided, “however a break above 114.21/31 is needed to ease the pressure of f this support for a fresh look at 114.73/92 – the high of November 2017 and 78.6% retracement of the December 2016/March 2020 fall.”

“With a major base in place above the 112.40 high of 2019, we look for an eventual break above 114.73/92 in due course for a move to 115.51 initially and then the long-term downtrend from April 1990 at 117.00/10.”