- USD/JPY fades bounce off eight-day low as 50-DMA challenges corrective bounce.
- Impending bear cross on MACD, steady RSI favor continuation of the latest downside.
- 100-DMA, 3.5-month-old ascending trend line appear tough nuts to crack for Yen pair sellers.
USD/JPY drops back towards the lowest levels in a week, mildly offered near 133.55 by the press time, as it defends the previous day’s downside break of the 50-DMA amid early Wednesday.
Adding strength to the bearish bias is the steady RSI (14) line around the 50.00 level, as well as the looming bear cross on the MACD indicator.
With this, the Yen pair is all set to revisit the eight-day low marked on Tuesday around 133.35. However, the 100-DMA support of near 132.90 could challenge the USD/JPY bears afterward.
In a case where the quote remains bearish past 132.90, an upward-sloping support line from the mid-January, close to 131.90 by the press time, will be the last defense of the Yen pair buyers as a break of which could open doors for the pair’s fall towards the yearly low of near 127.20.
Alternatively, a daily closing beyond the 50-DMA level of 133.80 becomes necessary for the USD/JPY buyers to take the risk of fresh entry.
Even so, the latest swing high around 135.15 and a horizontal area comprising multiple levels marked since November 2022, surrounding 133.45-70, will be a tough nut to crack for the Yen pair bulls.
To sum up, USD/JPY remains on the bear’s radar with the 50-DMA breakdown.
USD/JPY: Daily chart
Trend: Further downside expected
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The USD/JPY currency pair appears to be exhibiting bearish tendencies with indications of the price falling further. This is despite a strong rally that took the pair to a two-week high of 135.89 last week. In the current scenario, the Yen bears seem to be aiming at a weekly low around 132.90.
From technical analysis, the USD/JPY pair has failed to hold to its gains and is trading near its lowest levels since mid-April. The pair appears to have already broken down a major support level of 134.75, bringing the 20-day moving average and the 50-day moving average well within the bearish camp. Moreover, the relative strength index (RSI) has dropped to 49.43, indicating a shift in momentum.
However, short-term technical analysis suggests that the 140.00 level remains a key battling line and any break below this could potentially make the bears much stronger than they already are. On the daily chart, the next main support level is 132.90 and if this is breached it could offer a bearish outlook for the pair.
Going forward, the USD/JPY’s outlook looks bearish and the chances of a break below the 132.90 mark cannot be ruled out. Therefore, for those looking to open a position in this currency pair, it may be best to wait for a clear trend before entering the market.
