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USD/JPY - 124.50 Might be an Important Resistance

Today, the USD fell across the board. Some attribute this weakness to anticipation that the FOMC will be less eager to raise rates now that the PBOC devalued the yuan. Although the intervention sparks the possibility of other central banks softening further, there is really no prospect of the BoJ becoming even more dovish than it already is. The USD/JPY was in an attempt to test the 2015-high at 125.85, but it retreated after the Yuan-devaluation.

USD/JPY 4H Chart 8/12
(click to enlarge)

The 4H chart shows that after the PBOC intervention, USD/JPY pushed to 125.25 but retreated sharply to new lows on the week. It did find support around last week's lows just above 123.75. So far, the rebound is strong. The following rally could provide an important clue to weather the USD/JPY is exhausted and needs a bearish correction/consolidation.

124.50 is a key support/resistance pivot. IF price can hold below this level, bears in this market will likely gain confidence and downside risk might open up to the 123.00 pivot from late July. A session close above 124.50 however should threaten the 125.25 high with the 125.85 high on the year in sight.