USD/JPY Price Forecast: Long-term trend could be reversing but bearish momentum lacking

USD/JPY has broken to new lows, indicating a possible reversal in the long-term trend.
The move lacks momentum, however, and risks running out of energy before a pull back higher.

Joaquin Monfort FXStreet

USD/JPY has made a bearish break below the key August 5 lows. Although the move down lacks momentum the break could be indicative of a long-term trend reversal.

USD/JPY Daily Chart

The pair has already broken below a major multi-year trendline, suggesting the long-term uptrend has been undermined. The break below the August 5 lows confirms it might have reversed. Given it is a principle of technical analysis theory that “the trend is your friend” such a break increases the odds of more downside evolving in the future.

Strong support comes in at 140.25 (December 2023 low), however, and this could slow the pair’s descent. A break below that level too, would provide even more confirmatory evidence of a reversal in the trend. Such a break might see price fall to the next target at 137.24 (July 2023 low).

USD/JPY is showing bullish convergence between the price and the Relative Strength Index (RSI). At the August 5 bottom, the RSI was in the oversold zone, now even though price has sunk to a lower low, RSI has not.

This could be a sign that the move down lacks bearish conviction and suggests a risk of a rebound higher.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

GBP/USD back to 1.3250, down modestly for the day

GBP/USD now comes under fresh downside pressure and recedes toward the mid-1.3200s on Tuesday, partially reversing the optimism seen at the beginning of the week. Meanwhile, Cable’s bearish tone follows the resumption of the upside traction in the Greenback, always amid the sharp rally in USD/JPY.

EUR/USD off tops, back to 1.1400

EUR/USD now loses some momentum and recedes from the area of recent daily tops, revisiting the 1.1400 neighbourhood in the latter part of Tuesday session. The pair’s daily decline comes in response to the resurgence of some buying interest in the US Dollar.

Gold clings to daily gains beyond $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Ripple defends critical support, Stellar extends recovery

Ripple (XRP) trades around the key $1.00 psychological level, consolidating as the token awaits its next directional catalyst. Stellar (XLM) extends its recovery above $0.178 after posting modest gains at the start of this week.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.