It's the same old story for USD/JPY - the currency pair failed to hold on to gains above the 114.00 handle on Tuesday.

The currency pair fell to a three-day low of 113.64 in the Asian session today on reports that US Senate Republicans may delay the corporate tax cuts. However, by early Europe, the currency pair had regained some poise, despite the 10-year Treasury yield hovering at the three-week low of 2.3 percent.

As of writing, the currency pair is trading at 113.85 levels; down 0.14 percent on the day. So how long will the currency pair continue trading in a sideways manner?

As discussed in the previous articles, the odds are stacked against the bulls. The list of intermarket/fundamental and technical factors favoring a downside break continues to grow. For example-

  • The 10-year treasury yield slid further to a 3-week low of 2.3 percent.
  • A lower highs pattern established on the daily chart

Daily chart

Lower highs pattern - 114.74-Nov. 6 high, 114.34-Nov. 7 high and 114.01 - today's high. As discussed yesterday, the daily chart is loaded with candlesticks showing bullish exhaustion, that too, near the resistance offered by the trendline sloping downwards from the Aug. 2015 high and Dec. 2015 high.

An end of the day close below today's low of 113.64 (support offered by the trendline drawn from Oct. 16 low and Oct. 31 low) could prove to be the straw that broke the USD bulls' back. It would mark a downside break and shall open doors for 112.00 levels and 111.60 levels.

The longer the squeeze, the more violent is the post-breakout move. Thus, a break below 113.64 could yield a quick-fire drop to 112.00 levels.

On the higher side, only a weekly close above 114.18 (resistance offered by the trendline drawn from the Aug 2015 high and Dec 2015 high) would revive the bull run.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD comes under pressure near 1.0630

EUR/USD comes under pressure near 1.0630

Further gains in the Greenback encourage sellers to maintain their control over the risk complex, forcing EUR/USD to retreat further and revisit the 1.0630 region as the US session draws to a close.

EUR/USD News

GBP/USD stays firm amid BoE, Fed commentary and US data

GBP/USD stays firm amid BoE, Fed commentary and US data

GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.

GBP/USD News

Gold is closely monitoring geopolitics

Gold is closely monitoring geopolitics

Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.

Gold News

Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court

Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court

Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row. 

Read more

Have we seen the extent of the Fed rate repricing?

Have we seen the extent of the Fed rate repricing?

Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.

Read more

Majors

Cryptocurrencies

Signatures