- USD/JPY was seen consolidating its losses near two-week lows, around 103.00 mark.
- The formation of a descending channel points to a well-established bearish trajectory.
- The pair seems vulnerable to challenge the channel support, near the 102.60-55 area.
The USD/JPY pair now seems to have entered a bearish consolidation phase and was seen oscillating in a range around 103.00 mark, just above two-week lows set on Wednesday.
Looking at the technical picture, the pair has been trending lower over the past four months or so along a downward sloping channel. This, in turn, points to a well-established downtrend and supports prospects for further weakness.
The negative outlook is reinforced by the fact that technical indicators on the daily chart have been struggling to recover from the bearish trajectory. However, year-end thin trading volumes held bearish traders from placing fresh bets.
Nevertheless, the USD/JPY pair remains vulnerable to slide further below December monthly swing lows and aim to challenge the lower boundary of the trend channel. The mentioned support is currently pegged near the 102.60-55 region.
Some follow-through selling will mark a fresh bearish breakdown and set the stage for an extension of the depreciating move. The USD/JPY pair might then accelerate the slide to the 102.00 mark before eventually dropping to test 2020 lows, around the 101.20-15 region.
On the flip side, the 103.40-50 area now becomes immediate strong resistance ahead of weekly highs, just ahead of the 104.00 level. A sustained move beyond might trigger a short-covering bounce and push the USD/JPY pair to the 104.70-75 supply zone.
This is followed by the key 105.00 psychological mark, which coincides with the trend-channel resistance and act as a strong barrier for the USD/JPY pair.
USD/JPY daily chart
-637450058366834865.png)
Technical levels to watch
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 retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.