USD/JPY: bears in control, dipping into 115 territory, but for how long before dollar rebounds?

Currently, USD/JPY is trading at 116.18, down -0.71% on the day, having posted a daily high at 117.55 and low at 115.96.

USD/JPY has stabilized after a spell of supply that took some more wind out the the dollar's sails, falling from the half way mark on the 117 handle down to test below the 116 handle. 

"Provided the dollar stays below the JPY116.80-JPY117.25 band, the downside correction remains intact. If JPY115  breaks, the next target is found in the JPY114.25-JPY114.50 area," analysts at Brown Brothers Harriman forcasted. 

Fed's Lockhart: Cyclical rebound from crisis "largely done"

However, while the dollar, for now, maybe on the back-foot, there is a bullish backdrop in respect to the Fed and US jobs market, "Markets have priced two +25bp Fed hikes to Dec 2017, vs a median dot plot 3 hikes. +156k in jobs is not especially eye-catching but slower jobs and higher wages may be a symptom of the proximity of full employment. In any case the slower pace of jobs growth is comfortably above the minimum pace needed to absorb new entrants. In the wake of this data the Fed will feel a median of three hikes feels “about right”," explained analysts at Westpac after last week's solid jobs report in nonfarm payrolls.

USD/JPY levels

Current price is 116.19, with resistance ahead at 116.39 (Daily 20 SMA), 116.43 (Daily Classic PP), 116.70 (Hourly 20 EMA), 116.87 (Hourly 100 SMA) and 116.90 (Weekly Classic PP). Next support to the downside can be found at 115.96 (Daily Low), 115.66 (Daily Classic S1), 115.57 (Weekly Low), 115.57 (YTD Low) and 115.19 (Weekly Classic S1). 

"While capped 118.54/66 we are unable to rule out a deeper retracement to the 114.54 then 111.98 area," explained analysts at Commerzbank, adding, "These are the 23.6% and the 38.2% retracements of the move up from November. However the market continues to indicate that this is an ‘a-b-c’ correction only and that it has already ended..."

Yen's U-turn: USD/JPY headed to 115 Friday lows? - Scotiabank