- USD/JPY holds lower ground after refreshing a one-month bottom.
- U-turn from the DMAs, rejection of bullish channel and the strongest bearish MACD signals since early February to favor sellers.
- Early February tops may test Yen pair bears ahead of 50-SMA.
- Buyers remain off the table unless witnessing a clear break of 200-DMA.
USD/JPY bears keep the reins for the third consecutive day heading into Monday’s European session. In doing so, the Yen pair seesaws around the lowest levels in one month, marked earlier in the day, as sellers poke the 134.00 threshold.
A clear U-turn from the 200-DMA, as well as a downside break of the 100-DMA, joins a sustained downside break of a five-week-old bullish channel to favor USD/JPY sellers. On the same line could be the strongest bearish MACD signals since early December 2022.
With this, the Yen pair appears all set to slump toward the 50-DMA support of 132.50. However, the early February swing highs near 132.90 seem to prod the USD/JPY sellers of late.
In a case where the USD/JPY price remains bearish past the 50-DMA, the 130.00 round figure and the previous monthly low surrounding 128.00 will be in the spotlight.
On the flip side, a convergence of the 100-DMA and the aforementioned channel’s lower line, close to 135.85, holds the key to USD/JPY pair’s recovery.
Even so, the 200-DMA can test the upside momentum near 137.50 before directing prices towards the aforementioned channel’s top line, close to 139.50 at the latest.
USD/JPY: Daily chart
Trend: Further downside expected
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The USD/JPY pair is renewing its one month low near 134.00 as bearish pressure appears to be approaching the 50-day moving average.
At the onset of the week, the USD/JPY pair essentially remained unchanged compared to the previous session. This comes as a part of the flat movement that has been observed in the market in recent weeks. But, recently, the Yen has been gaining strength, mostly due to the uncertainty surrounding the US-China trade talks.
Looking at the technical picture, the USD/JPY pair appears to be in a bearish trend. The pair is on track to break below the 50-day moving average (DMA) of 135.50, which indicates that the short-term trend remains bearish. The next target for the bears may be the support level at 133.50 and a breakdown below this level could open room for further bearish pressure.
Meanwhile, the RSI is moderately bearish and is indicating that bearish momentum is present in the market. However, traders may take offense if the market breaks below the 50-DMA as this could trigger a stronger sell-off.
On the flip side, if the market continues to remain above the 135.50 support level, then the pair could once again gain strength. In that case, the bullish target could be the resistance level at the 137.00 mark.
In conclusion, it appears that the current bearish sentiment could carry on for some time and traders should be wary of any possible breakouts below the 50-DMA. Should this happen, we could see the USD/JPY pair decline further towards the 133.50 level, while on the opposite side, a resilience above the 135.50 level could provide some relief to bulls and open up room for further gains.