Title: USD/JPY Slides Amid Bearish Price Momentum and Rejection at March High
Original article by Joe Perry, Forex.com
Rewritten and expanded by [Your Name]
The USD/JPY currency pair has experienced a notable decline after struggling to sustain gains near its March highs. Recent developments in price movement suggest that bearish momentum is becoming more prominent. As the pair continues to reflect a pattern of lower highs and lower lows, traders are closely watching upcoming U.S. labor market reports and Federal Reserve commentary for clues on future direction.
This analysis expands upon the original insights provided by Joe Perry at Forex.com, offering a deeper look at current trends, key support and resistance levels, and fundamental drivers that are likely to influence USD/JPY in the short-to-medium term.
Overview of Recent USD/JPY Price Action
– The USD/JPY pair failed to maintain upward momentum after briefly retesting resistance near its March high at 151.95.
– Following this failure, the currency pair began forming a series of lower highs and lower lows, indicating a bearish shift in market sentiment.
– Price action has been increasingly characterized by rejection at key levels and a steady descent below major moving averages on several timeframes.
Bearish Technical Structure
The technical landscape for USD/JPY has shown a reversal from March and April bullish trends:
– The pair is forming a bearish price series—each rally attempt is met with selling pressure, and bears continue to set the tempo with lower peaks.
– Support near 153.00 initially held during early April, but was eventually breached once bullish momentum waned.
– The daily chart shows price trading below the 50-day Simple Moving Average (SMA), adding to the overall bearish tone of the market.
Key chart observations:
– The March high near 151.95 remains a formidable resistance level. This area has now been tested multiple times without a sustained breakout.
– As of the latest trading sessions, USD/JPY is trending downward from a high of 157.70 (set in late April), making lower highs with each successive rally attempt.
– The 50-day SMA sits around 154.30, and price is now clearly trading below it, reinforcing a technical breakdown.
– Daily MACD (Moving Average Convergence Divergence) has crossed bearish, confirming downside momentum.
Fundamental Backdrop: Monetary Policy Divergence
While technical signals point to bearish price action, the broader fundamental backdrop remains complex:
– The U.S. Federal Reserve continues to play a central role in influencing USD movements. Investors are focused on when and by how much the Fed may eventually start cutting rates.
– Meanwhile, the Bank of Japan (BoJ) has only recently shifted away from its ultra-accommodative policy stance, supporting the yen to some extent.
– However, the BoJ remains relatively dovish compared to the Fed, which limits significant gains for JPY.
Upcoming Data and Potential Catalysts
Traders should focus on the following upcoming releases and events for potential volatility in USD/JPY:
• U.S. Non-Farm Payrolls (NFP):
– Historically a market-moving economic report, especially if job creation sharply deviates from expectations. Strong data could revive Fed hawkishness and support USD.
• U.S. unemployment rate and wage growth:
– A lower unemployment rate or acceleration in wage inflation may signal a tight labor market, offsetting concerns of recession and bolstering USD.
• Federal Reserve Commentary:
– Remarks from Fed Board members and minutes from prior FOMC meetings will offer insight into inflation outlooks and monetary policy stance.
• Japanese inflation and wage data:
– A rise in Japanese inflation or nominal wages could raise speculation about additional BoJ tightening, thereby supporting yen strength.
Institutional Positioning and Sentiment
– CFTC (Commodity Futures Trading Commission) positioning data shows that net long U.S. dollar positions have grown since late March but are starting to flatten as uncertainty increases.
– Japanese investor positioning
Explore this further here: USD/JPY trading.