Weaker yen has helped Japanese shares prevent sharp losses on Tuesday but the upward momentum for USD/JPY has to be supported by some good news from Europe, fundamentals suggest. The pair that touched a 2-month high of 84.39 on Monday was down 0.6 percent at its lowest of 83.89 touched late in Asia on Tuesday.
USD/JPY tends to fall further as the session grows to Europe and given the market mood to stay prepared for more bad news from Portugal or Spain, likely in the coming days, the pair may only have a brief stop near 83.75 (S1), the 61.8 percent Fibonacci from late September levels on the daily chart. It could hold that level for the day.
The pair has been holding its 14-day RSI mostly below 57 as the red line indicates, and presently at around 66, it looks poised for falling further. And on the way down, even if it manages to break below the key 83.5 level (S2), it could well be supported at around 82.77 (S3), as pointed by the 50-day moving average. That level could well remain through the rest of the month given the sluggish season at the end of the year.
That said, a big surprise in terms of economic data from the US or a fresh geo-political development worth generating a safety seeking rally in favor of dollar can well push the pair to a strong 84.71 resistance.