- USD/JPY bears take over and eye 136 the figure, or thereabouts.
- The 10-min chart's M-formation's neckline aligns with a 36.2% Fibo, offering additional conviction for the downside bias.
USD/JPY has been an early mover on Wednesday in Asia, falling from a high of 136.71 and dropping to 136.24 so far. The price is however stalling here and consolidation is taking shape after the dovish Bank of Japan Minutes.
Before the sell-off in USD/JPY, the yen weakened to the lowest point since 1998 as investors bought up risk assets following last week's rout in equities. Bargain hunting put a global bid on equities. MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3%, moving higher from a more than five-week low and set for its best day in around two weeks.
Japan's benchmark Nikkei average gained 2.22%. European shares also closed higher for a second consecutive day on Tuesday. The Stoxx Europe 600 gained 0.35%, London's FTSE 100 added 0.42%, France's CAC rose 0.75% and Germany's DAX edged up by 0.20%. The Swiss Market Index was off 0.06%. On Wall Street, all sectors in stocks are in the green with the Dow Jones Industrial Average (DJI) climbing 641.47 points, or 2.15%, to 30,530.25, and the S&P 500 adding 89.95 points, or 2.45%, at 3,764.79. The Nasdaq Composite put on 270.95 points, or 2.51%, at 11,069.30.
Consequently, the yen is gaining against a softer US dollar and rising euro. The single unit rose on Tuesday, drawing support from the European Central Bank's plans to raise interest rates to contain inflation. The dollar index DXY, which tracks the greenback against six major peers including the euro and the yen, was down 0.2% at 104.23, with eyes on Federal Reserve Chair Jerome Powell's testimony to Congress, which kicks off on Wednesday. Investors will be pivoting to Fed Chair's testimony, looking for further clues on future interest rate hikes and his latest views on the economy.
USD/JPY technical analysis
As per the prior multi-timeframe analysis from the New York session, USD/JPY Price Analysis: Bears are lurking and a significant correction could be on the cards, a topping formation was highlighted on the 5-min chart:
The price has subsequently dropped as follows, leaving a menacing M-formation on the hourly chart:
The bulls are moving in at this juncture and the price imbalance could be mitigated below any further downside towards 136 the figure.
If, on the other hand, the bears commit at this juncture, then the 36.2% Fibo may be confirmed as a strong enough correction:
The 10-min chart's M-formation's neckline aligns with the Fibo, offering additional conviction to the downside case.
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
Editors’ Picks
US economy grows at an annual rate of 1.6% in Q1 – LIVE
The US' real GDP expanded at an annual rate of 1.6% in the first quarter, the US Bureau of Economic Analysis' first estimate showed on Thursday. This reading came in worse than the market expectation for a growth of 2.5%.
EUR/USD retreats to 1.0700 after US GDP data
EUR/USD came under modest bearish pressure and retreated to the 1.0700 area. Although the US data showed that the economy grew at a softer pace than expected in Q1, strong inflation-related details provided a boost to the USD.
GBP/USD declines below 1.2500 with first reaction to US data
GBP/USD declined below 1.2500 and erased a portion of its daily gains with the immediate reaction to the US GDP report. The US economy expanded at a softer pace than expected in Q1 but the price deflator jumped to 3.4% from 1.8%.
Gold falls below $2,330 as US yields push higher
Gold came under modest bearish pressure and declined below $2,330. The benchmark 10-year US Treasury bond yield is up more than 1% on the day after US GDP report, making it difficult for XAU/USD to extend its daily recovery.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.