USD/JPY Technical Analysis | Forexlive
On the daily chart below, we can
see that the buyers couldn’t manage to break the 138 handle and the sellers
took control as risk aversion spread across the markets. The selloff in the
USD/JPY pair began with the higher unemployment rate and lower than expected
wage gains in the NFP
report.
Soon after, the selloff
intensified as the Silicon
Valley Bank failed and the markets started to fear a contagion
and another banking crisis. Treasury yields started to fall fast and dragged
the pair lower. At some point the market was pricing three rate cuts by the end
of the year and no hike at the March meeting.
This repricing weighed on the US
Dollar and gave the buyers a hard time. The price bounced from the 132.96 support and the moving
averages are on the brink of crossing lower, which may be a bad omen for the
buyers.
On the 4 hour chart below, we can
see that after the Treasury and the Fed took emergency actions on Monday to
calm the markets and avert a banking crisis, the pair started to drift higher.
The bounce came at the 133 handle and the 50% Fibonacci
retracement level of the entire move higher since February.
Moreover, yesterday the US
CPI report
showed that inflation is still too high in the US, although the data was in
line with expectations and didn’t trigger major moves. If the sellers manage to
push the price below the 133 level again, then they should be in control and we
may see a fall towards the 131 or 130 levels.
On the 1 hour chart below, we can
see that the sellers will lean on the resistance at 135.36 where we have also the
confluence with the 61.8% Fibonacci
retracement level. More conservative sellers may want to wait for a break below
the trendline before taking new short
positions.
The buyers, on the other hand,
will want to wait for a break above the 135.36 resistance before considering
new longs and the trendline will act as support for them.