USD/JPY Price Analysis: Drops to over one-week low, looks to 131.40-30 to offer some support


  • USD/JPY turns lower for the second straight day and drops to over a one-week low on Thursday.
  • The post-US CPI USD selling bias, sliding US bond yields continue to exert pressure on the pair.
  • The risk-on impulse could undermine the safe-haven JPY and help limit the fall, for the time being.

The USD/JPY pair attracts fresh selling near the 133.30 region on Thursday and prolongs the previous day's rejection slide from the 50-day SMA. The intraday descent extends through the early North American session and drags spot prices to a one-week low, around the 131.75-131.70 area in the last hour.

The US dollar remains depressed near its lowest level since late June amid diminishing odds for a more aggressive rate hike by the Fed. Apart from this, a fresh leg down in the US Treasury bond yields narrows the US-Japan rate differential and benefits the Japanese yen, which, in turn, exerts downward pressure on the USD/JPY pair.

That said, the risk-on rally - as depicted by a strong performance across the equity markets - could keep a lid on any further gains for the safe-haven JPY. This, and the divergent monetary policy stance adopted by the Fed and the Bank of Japan, should lend some support to the USD/JPY pair and limit the fall, at least for the time being.

From a technical perspective, bulls now look to the 131.50-40 strong horizontal resistance breakpoint to offer some support. This is closely followed by the 100-day SMA, around the 131.20 region, which if broken decisively would be seen as a fresh trigger for bearish traders and prompt aggressive technical selling around the USD/JPY pair.

The downward trajectory could then accelerate towards challenging the monthly swing low, around the 130.40-130.35 region touched on August 2. The next relevant support is pegged near the key 130.00 psychological mark, which should act as a pivotal point for traders and help determine the next leg of a directional move for the USD/JPY pair.

On the flip side, the 132.50-132.55 region now seems to cap any recovery move. Sustained strength beyond might trigger some short-covering and allow the USD/JPY pair to reclaim the 133.00 round-figure mark. Some follow-through buying, leading to a subsequent move above the daily high, around the 133.30 region, would negate the negative bias.

The USD/JPY pair might then climb to the 133.80-133.85 intermediate hurdle en route to the 134.00 mark and the 134.30 resistance zone. The upward trajectory could get extended toward the 135.00 psychological mark, above which bulls could aim to conquer the 50-day SMA strong barrier, currently around the 135.20-135.25 region.

USD/JPY daily chart

fxsoriginal

Key levels to watch

USD/JPY

Overview
Today last price 132.02
Today Daily Change -0.87
Today Daily Change % -0.65
Today daily open 132.89
 
Trends
Daily SMA20 135.64
Daily SMA50 135.2
Daily SMA100 131.13
Daily SMA200 123.06
 
Levels
Previous Daily High 135.3
Previous Daily Low 132.03
Previous Weekly High 135.5
Previous Weekly Low 130.4
Previous Monthly High 139.39
Previous Monthly Low 132.5
Daily Fibonacci 38.2% 133.28
Daily Fibonacci 61.8% 134.05
Daily Pivot Point S1 131.51
Daily Pivot Point S2 130.13
Daily Pivot Point S3 128.24
Daily Pivot Point R1 134.79
Daily Pivot Point R2 136.68
Daily Pivot Point R3 138.06

 

 

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