Mid-Day Technical Outlook for USD/JPY
Original analysis by ActionForex.com (Source: https://www.actionforex.com/technical-outlook/usdjpy-outlook/622560-usd-jpy-mid-day-outlook-2219/)
Overview
The USD/JPY currency pair has shown relative resilience above the 154.33 support level, remaining confined in a consolidative phase from its recent high at 157.70. While the pair has not yet marked a definitive reversal, the current structure suggests that a deeper pullback cannot be ruled out unless stronger bullish momentum emerges.
USD/JPY remains broadly supported in the medium to longer-term outlook, particularly with interest rate differentials favoring the dollar over the yen. However, risk sentiment, intervention fears from Japanese authorities, and technical barriers may influence near-term volatility.
Intraday Analysis
– At mid-day, price action indicates limited downside from 157.70, with support seen near the 155.00 psychological level.
– Initial intraday bias is neutral as the pair consolidates within a narrow range.
– A break of 154.33 support will confirm that the short-term rise from 151.86 has completed at 157.70.
– This would suggest resumption of the corrective fall from 160.20, which started in late April, pushing the pair toward further downside targets.
– Conversely, a move back above 157.70 would shift the immediate bias to the upside and likely resume the larger overall uptrend.
Short-Term Technical Outlook
– The recent high of 157.70 has proven to be a near-term resistance hurdle.
– The currency pair is currently struggling to maintain bullish traction above 156.50.
– The short-term moving averages remain relatively flat, suggesting indecision or a pause in the recent bullish momentum.
– RSI (Relative Strength Index) on the 4-hour chart is hovering close to 50, highlighting the neutral bias for the moment.
Key Technical Levels
Support Levels:
– Immediate support: 155.00 (psychological)
– Next support: 154.33 (last swing low)
– Further support: 152.80 (prior resistance turned support)
– Key downside pivot: 151.86 (significant low in current correction)
Resistance Levels:
– Immediate resistance: 157.70 (recent high)
– Further resistance: 158.00 (round number resistance)
– Key resistance: 160.20 (multi-year high and peak in April 2024)
Trend Analysis
– The overall trend from 140.25 (January low) to 160.20 remains intact on a broader timescale.
– This rally unfolded in a five-wave Elliott structure, indicating a multi-month impulse that may still be under development.
– After reaching the 160.20 top, USD/JPY entered into a corrective phase. The recent pullback to 151.86 marks a potential wave A of correction.
– The move up to 157.70 may represent a wave B rebound, with a possible wave C decline expected towards 151.86 or lower if the correction deepens.
– Longer-term uptrend remains safe as long as 146.47 support (March low) holds.
Daily Chart Considerations
– The daily chart reflects a completed rising channel from January, suggesting the pair may be in a broader consolidation.
– Price has failed to reclaim the 20-day moving average decisively, reflecting near-term sell pressures post-160.20 peak.
– Bollinger Band structure is contracting, which aligns with the current consolidation and potential for a breakout in either direction.
Fundamental Backdrop
– Bank of Japan (BoJ) remains dovish relative to the Federal Reserve, with limited scope for tightening policy.
– U.S. macroeconomic data remains relatively resilient, bolstering dollar strength on expectations the Fed may delay rate cuts.
– Interest rate differentials continue to favor USD over JPY, a key driver behind the yen
Explore this further here: USD/JPY trading.