USD/JPY: Only a break below 138/137.20 would denote possibility of a deeper decline – SocGen

Economists at Société Générale analyze USD/JPY technical outlook.

High achieved earlier this week near 141 likely to be a short-term resistance

USD/JPY hit the upper limit of a multi month channel at 141 resulting in an initial pullback. Next potential support is located at the graphical levels of 138/137.20 which is also the 200-DMA. 

It is worth noting that the 138/137.20 region had acted as a hurdle since December and is expected to be an intermittent support. Only a break below would denote possibility of a deeper decline. Test of this zone could result in a bounce; the high achieved earlier this week near 141 is likely to be a short-term resistance.