USD/JPY: Bearish Pattern Could Lead To Directional Break Lower

The U.S. Dollar is holding steady around the 111.00 level against the Japanese yen on Friday, despite an earlier knee-jerk reaction lower in the pair over emerging-market woes in Turkey and Russia. Traders have moved into both the U.S. Dollar and the Japanese yen, creating a stalemate in the USD/JPY as traders seek the haven of both currencies.

In times of geopolitical uncertainty, the Japanese yen currency is favoured due to its status as a major current account surplus nation. Strong demand for U.S. government treasury bills is currently helping to underpin USD/JPY strength alongside rising U.S. interest rates.

Looking at the short-term technicals for the USD/JPY pair, a bearish head and shoulders pattern is visible, with a fairly sizeable downside projection. The neckline of the bearish pattern is located around the 110.55 level; we also have further key support below that sellers previously struggled to breach at 110.00 and 109.54 level.

To the upside, the 111.37 resistance level is still the key area to watch, as it denotes a key upside breakout point from earlier this summer. Key resistance above this key level is currently found at the 112.05 and 112.50 levels.

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 Bearish Pattern Could Provide Directional Move

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