USD/JPY Technical Analysis | Forexlive
On the daily chart below, we can
see that the trend has switched to the downside as depicted by the moving
averages. The pair has been dragged lower by the big fall in Treasury yields as
the market repriced lower future interest rates expectations due to the fears
of a banking crisis.
USD/JPY is correlated with the
direction of the US Treasury yields and that’s why we’ve seen such a selloff
since the failure of the Silicon Valley Bank. Looking ahead though, we have the
FOMC
decision today and it’s likely that we will see the USD back in favour in case
the Fed sounds hawkish, while a dovish outcome would favour the JPY.
On the 4 hour chart below, we can
see that the selling momentum recently weakened as shown by the divergence between the price and the MACD. We can also see that the trendline has been broken and the moving
averages have crossed to the upside.
All in all, this may be a signal
that a bigger correction is due, and the target should be the resistance at 135.10. In the end though,
the direction will be decided by the FOMC today and economic data in the next
few weeks.
On the 1 hour chart below, we can
see that the buyers are finding resistance at the 132.64 level. This will be a
key level to watch in case the price breaks above it as we will likely see a
rally towards the 135.10 resistance afterwards.
The buyers will also have the
minor upward trendline as support with an even better risk to reward ratio. The
sellers, on the other hand, will watch for a break below the minor trendline
and the 131.50 level, as this would turn into a major fakeout and give the
sellers control.