Forex: USD/JPY hits fresh 8-month low at 85.85

FXstreet.com (Barcelona) - Dollar recovery attempt was capped on Monday at 86.90, and , after brief consolidation during Asian session, the pair has broken lower, weighed by broad-based Dollar weakness to hit a fresh 8-month low at 85.85, right at Nov 30, 2010 low.In case of breaking below 85.85 (Nov 30 low), next support level could be at 85.00 and 84.80 (Nov 27 low). On the upside, the pair might find resistance at 86.85 (Ago 2 high), and above here, 87.00/20 87.20 (intra-day level) and 87.45/65 (intra-day level).On a wider perspective, Nicole Elliott, senior technical analyst at Mizuho Corporate bank warns about a potential wedge formation, which could cause a sudden short-covering rally: "Expect more cautious downside probing today and probably throughout August. However, we warn against complacency as price action since mid-June is a potential ‘wedge’ formation which could cause a sudden and large short-covering rally at any point in time."