USD/JPY Price Analysis: Rebound remains capped below 133.50, with bear cross in play

USD/JPY has paused its two-day recovery momentum, trading on the backfoot in Asian trading this Monday.

The pair remains volatile within a familiar trading range, having dropped to daily lows near 132.90 before rebounding to near 133.30, where it now wavers.

The latest upswing in the major could be attributed to a fresh leg up in the US dollar across its major peers after disappointing Chinese Retail Sales, Industrial Output and Fixed Asset Investment data missed expectations and spooked investors’ sentiment.

The US Treasury yields also trade sluggishly, offering little impetus to bulls, as investors also remain wary about the latest unexpected rate cuts by the PBOC.

Earlier on, the Japanese yen picked up bids and reached daily highs against the greenback, despite the below-forecast Japanese Q2 GDP data, which grew at a quarterly pace of 0.5% vs. 0.6% expected. Japan’s PM Fumio Kishida instructed to keep the imported wheat prices unchanged, shrugging off rising inflationary pressures.

From a short-term technical perspective, bulls need acceptance above Friday’s high of 133.89 to extend the ongoing recovery.

The next crucial resistance is aligned at 135.00, which is the confluence of the round figure mark and the bearish 21-Daily Moving Average (DMA).  

Although the recent upside in the price appears to faze out, bears remain hopeful following the confirmation of a bear cross last Friday. The   21 DMA cut the 50 DMA for the downside, flashing a bearish signal.

The 14-day Relative Strength Index (RSI) is inching lower below the midline, adding credence to a potential move lower.

USD/JPY: Daily chart

The spot could look to retest the upward-sloping 100 DMA at 131.45 on a failure below the daily low.

Further south, the August 2 low of 130.39 will be on sellers’ radars.

USD/JPY: Additional levels to consider