**USD/JPY Under Negative Pressure: Technical Analysis and Future Outlook**
*Based on work originally published by economies.com. All credit to the original author.*
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The forex landscape remains highly dynamic, with the USD/JPY currency pair at the forefront of trader attention amid recent market turbulence. As central banks navigate monetary policy adjustments and global geopolitical tensions persist, USD/JPY finds itself under notable downward pressure. This comprehensive analysis delves into the core catalysts behind the negative momentum, employs technical indicators for a detailed forecast, and examines significant support and resistance levels likely to influence trading decisions over the coming weeks.
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**Fundamental Drivers Behind The Downward Pressure**
Several interrelated fundamental factors have combined to influence USD/JPY’s negative trajectory:
– **US Monetary Policy Signals:** The US Federal Reserve has recently adopted a cautious stance, signaling potential delays in further interest rate hikes. This perceived dovishness has sapped some demand for the dollar, curbing its relative strength versus the yen.
– **Japanese Economic Data:** Fresh data out of Japan shows resilience, particularly in GDP growth and export numbers. Stronger Japanese economic performance tends to bolster the appeal of the yen as a safe haven.
– **Geopolitical Tensions:** Global uncertainties, including ongoing trade disputes and regional security concerns in East Asia, continue to drive periodic flights to safety. The yen’s traditional role as a shelter currency means that heightened risk aversion often results in downward pressure on USD/JPY.
– **Inflation Dynamics:** While US inflation appears to be moderating, the Bank of Japan remains vigilant regarding deflationary risks, but any sign of changing BoJ policy stances can rapidly amplify currency volatility.
– **US Treasuries and Yield Spreads:** Declining yields on US Treasuries have contributed to a narrowing of the interest rate differential between the US and Japan, reducing the appeal of holding dollars over an appreciating yen.
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**Technical Analysis: Chart Patterns and Key Levels**
A detailed technical assessment reveals further insight into USD/JPY’s current and future behavior.
**Current Price Action**
– USD/JPY has broken below several short-term moving average supports, reflecting sustained downward momentum.
– Recent candles on the daily and four-hour charts show decisive bearish engulfing patterns, reinforcing the likelihood of further declines.
**Trend Analysis**
– **Downtrend Confirmation:** The pair is persistently forming lower highs and lower lows, classic hallmarks of a prevailing downtrend.
– **Moving Averages:** The 50-day simple moving average (SMA) has crossed below the 100-day SMA, a bearish signal that often portends additional selling pressure ahead.
– **Relative Strength Index (RSI):** The RSI remains below the 50 mark, indicating that bears still enjoy the upper hand, though not yet at oversold extremes.
**Support and Resistance Levels**
Traders will be closely watching several pivotal support and resistance zones:
– **Major Supports:**
– **146.80:** This is a crucial horizontal support area, tested multiple times over the past quarter. A firm breach lower could open the floodgates to additional selling.
– **146.00:** The psychological round number offers secondary support, likely to attract bidding interest from value-seeking buyers.
– **145.60 and 145.00:** Mark the next significant areas of potential downside, with 145.00 as a major floor tied to previous multi-month lows.
– **Key Resistances:**
– **148.00:** The initial upside hurdle that must be overcome for a shift in near-term sentiment.
– **149.30:** Previous peaks in the price action, also coinciding with the 50-day SMA, reinforce this level as a formidable resistance.
– **150.00:** The psychological barrier and a weekly chart pivot, critical for establishing any bullish reversal.
**Fibonacci Retracement Analysis**
Plotting the recent swing high to swing low produces notable Fibonacci retracement levels:
– **38.
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