USD/JPY: risk is to the downside or a buy on dips?

Currently, USD/JPY is trading at 110.78, up 0.03% on the day, having posted a daily high at 110.83 and low at 110.72.

USD/JPY remains firm in the Tokyo open, consolidated in a sideways narrow range after last week's solid nonfarm payrolls report and a robust performance on Wall Street again. The sessions overnight were otherwise subdued, lacking data and the dollar is flat for the session so far.  However, some dovish comments from Fed's Bullard and Kashkari clipped the wings of the dollar and US 10yr treasury yields slipped from 2.28% to 2.25% during the same US shift.

"FOMC dove (and non-voter) Bullard said he is worried about the softness in inflation, and didn’t expect falling unemployment to provide a boost to such. He supported a start to tapering soon. Dove (and voter) Kashkari thought the economy was doing well but wage growth was slow," noted analysts at Westpac. For the day ahead, China has the July trade balance.

USD/JPY levels

USDJPY: Buy dips or a break of 111.05

Valeria Bednarik, chief analyst at FXStreet explained that from a technical point of view, the risk remains towards the downside:

"The early intraday advance stalled short of the 50% retracement of its latest daily slide around 111.05, the immediate resistance whilst the 100 SMA maintains its sharp bearish slope well above the current level. The Momentum indicator in the mentioned chart continues heading north within positive territory, but the RSI indicator already turned south around 53, this last anticipating some further slides ahead," noted Bednarik.