USD/JPY: Upside move gathers traction, tests 200-hour MA

• The yen is being offered in Asia despite overnight losses in US stocks.
• USD/JPY eyes break above 200-hour moving average (MA).

Having trapped bears on the wrong side of the market on Monday, the USD/JPY pair moved above 106.00 in early Asia and was last seen near the 200-hour MA of 106.31.

The weakness in the Japanese Yen is somewhat surprising, given the Dow Jones registered a 335 drop yesterday. Also, the Asian equities are reporting moderate losses. For instance, stocks in Australia and New Zealand are down 0.57 percent and 0.17 percent, respectively. Meanwhile, the Shanghai Composite is trading flat to negative.

That said, the pair's resilience to risk-averse move in the stocks could be short-lived as offers are seen at 106.0 and above (as per Reuters report).

Rounding bottom on the hourly chart

The spot seems to have formed a rounding bottom on the hourly chart, suggesting increased odds of a convincing move above the 200-hour moving average (MA). On the dailies, the 10-MA and 21-MA have bottomed out (shed bearish bias) as well. So, the pair may extend gains, still, caution is advised as trade war fears could yield a big drop in the equities.

USD/JPY Technical Levels

A convincing break above 106.31 (200-hour MA) would add credence to rounding bottom pattern on the hourly chart and open doors for 106.87 (descending 30-day MA) and 107.00 (psychological hurdle). On the downside, a close below 105.60 (March 16 low + rounding bottom low) could yield a drop to 105.25 (March 2 low) and 105.00 (major psychological support).