Title: USD/JPY Technical Outlook – Price Below 50-Day SMA Signals Potential Weakness
Author credit: Originally reported by Cristian Antony Ramos, FXStreet
The USD/JPY currency pair began the week on uncertain footing. After testing the 145.00 level last week, a key psychological support, the pair failed to sustain upward momentum and has since slipped below its 50-day Simple Moving Average (SMA). This development could suggest a shift in market sentiment as traders reassess expectations surrounding future interest rate policy from both the Federal Reserve and the Bank of Japan (BoJ).
While USD/JPY continues to exhibit some consolidation characteristics, the break below a technical support level — particularly the 50-day SMA — offers valuable insight into where market pressure might be shifting. In this comprehensive analysis, we’ll examine the current technical landscape for USD/JPY, focus on price action behavior, and evaluate what traders might anticipate going forward.
Overview of Current Market Conditions
• USD/JPY fell to a session low of approximately 144.55 during early trading on Monday, showing weakness after consolidating in a sideways range since reaching highs near 147.87 earlier in August.
• The dip beneath the 50-day SMA marked a significant technical move, as this moving average had previously acted as a buffer for downside attempts.
• The pair now approaches further support zones, with traders closely monitoring how the price responds near the psychological level of 144.00.
• Broader market expectations around diverging monetary policies remain in play, with rising U.S. Treasury yields attempting to support USD strength, though this dynamic has been tested by recent economic developments.
Technical Analysis: Daily Chart Structure
Moving Averages and Price Action:
• The 50-day SMA, which served as an important short-term support near the 144.90 area, has now been broken. This raises concerns for bullish traders searching for continued upward momentum.
• At the same time, the 100-day SMA lies lower, around the 142.35 region, and may now serve as the next significant area of support.
• Should bearish momentum accelerate, traders will likely turn their attention toward this 100-day SMA as a critical gauge of trend direction.
Relative Strength Index (RSI):
• The Daily RSI is approaching a neutral territory, settling near the 50 level.
• This suggests that momentum is currently balanced between buyers and sellers, but the break in the 50-day SMA may tilt the odds in favor of sellers unless the pair rebounds.
• Continued RSI readings below 50 would further affirm weakening bullish momentum and potentially point toward deeper downside levels.
Fibonacci Retracement Zones:
• Applying a Fibonacci retracement from July’s swing low near 138.05 to the August high just short of 148.00, key retracement levels emerge:
– 38.2% Fibonacci at 144.30.
– 50.0% Fibonacci at 143.00.
– 61.8% Fibonacci at 141.70.
• At the time of writing, USD/JPY hovers just above the 38.2% level. A deeper decline could bring the 50% and 61.8% retracement zones into play as potential support areas.
Support and Resistance Levels:
Immediate Support Zones:
• 144.30 – Close to the 38.2% Fibonacci retracement level.
• 143.70 – A previous consolidation low and horizontal support.
• 143.00 – Corresponds closely with the 50% Fibonacci retracement.
• 142.35 – The 100-day SMA, representing a major medium-term support.
Key Resistance Zones:
• 145.00 – A psychological threshold and the former support area.
• 145.80 – The 50-day SMA, now acting as resistance after the recent breakdown.
• 147.00 – Intermediate resistance based on
Explore this further here: USD/JPY trading.