- The USD/JPY is recovering some ground in the week and trimmed losses to 0.35%.
- Sentiment improved during the day since the Asian session opened, while the greenback remains buoyant.
- USD/JPY Price Forecast: A falling wedge targets a re-test of the YTD high at 131.34.
The USD/JPY stalls and rebounds from weekly lows near 126.36, despite falling US Treasury yields, as investors get ready for the release of May’s Federal Reserve’s Open Market Committee minutes. At 127.44, the USD/JPY gains some 0.54% during Wednesday’s North American session.
The market mood remains positive, as market players disregard concerns that the US Federal Reserve’s hiking cycle could spur a recession in the US. Additionally, bets that the Federal Reserve would hike near 3% diminished as money market futures swaps illustrate that investors expect the Federal Funds Rate (FFR) to finish at around 2.75%.
On Wednesday, the USD/JPY began trading above 126.70s and, since then, ground higher, breaking on its way up daily’s resistance levels, as the central pivot point at 127.07, followed by the 50-hour simple moving average (SMA) at 127.26.
USD/JPY Price Forecast: Technical outlook
The USD/JPY is neutral-upward biased, despite trading below the 20-day moving average (DMA) at 129.16, which in the near term is a bearish signal. The Relative Strength Index (RSI) at 47.31 is in bearish territory, but it’s aiming higher and could trigger a bullish signal when crossing the 50-midline. It is worth noting that USD/JPY’s price action since reaching the YTD high around 131.34 formed a falling wedge that usually breaks upwards, meaning that the USD/JPY might be at a turning point.
If that scenario plays out, the USD/JPY’s first resistance would be May 25 high at 128.08. A break above would send the pair aiming toward higher prices, exposing several resistance levels, like the 20-DMA at 129.16, followed by a re-test of the YTD high at 131.34.
On the flip side, the USD/JPY first support would be 127.00. A breach of the latter would expose the May 24 daily low at 126.36, immediately followed by the 50-DMA at 126.20 and the March 28 daily high at 125.10.
Key Technical Levels
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
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.