USD/JPY Technical Analysis: Defends 61.8% Fib support despite a 0.6% drop in S&P 500 futures

• The S&P 500 futures are reporting a 0.6 percent drop in Asia, signaling worsening risk aversion. The Shanghai Composite index has hit four-year lows, while Japan'sNikkei index has dropped to the lowest level since March 15, 2017.
• Still, the USD/JPY has defended the support at 111.97 (61.8% Fib R of 110.38/114.55) and is now trading at 112.18. More importantly, it has created a bullish divergence of the relative strength index (RSI) on the 15-minute chart.
• A minor bounce to 112.438 (555-period EMA on 15-min chart) could be in the offing. A bigger rally could unfold in the North American session if the US consumer price index (CPI) betters estimates.

15-Minute Chart

Spot Rate: 112.18

Daily High: 112.31

Daily Low: 111.97

Trend: Minor corrective bounce likely

Resistance

R1: 112.31 (session high)

R2: 112.73 (5-day EMA)

R3: 113.00 (psychological hurdle)

Support

S1: 111.97 (61.8% Fib R of 110.38/114.55)

S2: 111.66 (Sept. 18 low)

S3: 111.38 (100-day EMA)