USD/JPY Price Prediction: Bouncing from close to August 5 lows

USD/JPY is rebounding from key support near the August 5 lows.
It is forming a bullish candlestick although it is not possible to be certain until the current 4-hour period ends.
The trend remains bearish although a correction higher looks likely.

Joaquin Monfort FXStreet

USD/JPY has fallen close to the August 5 lows and bounced. It is forming a large, bullish Hammer Japanese candlestick pattern on the 4-hour chart – if the current period ends with the pattern intact it could signal the start of a substantial pull-back or correction higher.

USD/JPY 4-hour Chart

The Relative Strength Index (RSI) momentum indicator has exited oversold, giving a buy signal and indicating a greater chance of a counter-trend correction evolving. The RSI has also itself formed a double bottom pattern when looking at the previous time it was oversold on September 4. This is further evidence strengthening the case for a bullish reaction.

The short-term trend remains down, however, and it is too early to be sure that the pair is reversing the trend fully. The correction higher could soon run out of steam, leading the pair to recapitulate and start falling in line with the trend. It is a major tenet of technical analysis that “the trend is your friend” and the odds favor a continuation lower.

However, it would require a break below the August 5 lows at 141.69 to confirm a continuation lower. Such a move would probably then fall to support at 140.44 initially, the December 2023 lows.

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.

AUD/USD breaks below 0.7000 ahead of inflation data

AUD/USD has accelerated its downward trend on Tuesday, breaching below the key 0.7000 yardstick ahead of the opening bell in Asia on Wednesday. Indeed, spot has retreated for the second day in a row despite the hawkish hike by the RBA early on Tuesday and in response to the continuation of the move higher in the Greenback. Looking ahead, all the attention will be on the release of Australia’s inflation data on Wednesday.

USD/JPY consolidates near 157.50 as a bullish USD counters intervention risks

USD/JPY struggles to capitalize on the overnight bounce from a one-week low, consolidating around 157.50 in the Asian session on Tuesday. Trump's concerns about the Japanese Yen's weakness fueled speculation about another US-Japan joint intervention. This, along with the hawkish BoJ, underpins the JPY and caps the currency pair. Meanwhile, rising Fed rate-hike bets and oil-driven inflation fears continue to push US bond yields to multi-year highs, keeping the US Dollar pinned near a two-month high and supporting the pair.

Gold trims gains; back toward $4,150

Gold now surrenders some of its initial advance and retests the $4,150 zone per troy ounce on Tuesday. Meanwhile, the move higher in the yellow metal comes despite the firmer US Dollar and rising US Treasury yields across the board, while escalating geopolitical tensions appear to limit the downside potential.

XRP advances within a robust technical structure

Ripple (XRP) shows signs of stabilizing after reclaiming support at $1.50 on Tuesday. A robust technical structure underpins the token’s short to medium-term bullish outlook. Still, XRP is not out of the woods yet, as profit-taking and buyer exhaustion could weigh on price action and extend the recent correction from September highs around $1.66.

RBA recap: Rate hikes are on the table as demand stays too strong

The Reserve Bank of Australia unanimously tightened monetary policy, warning that inflation remained too high and that several upside risks had begun to materialise. Governor Michele Bullock said the Board would raise rates again if necessary.

Silver is more volatile than Gold ahead of PCE and NFP. This chart shows the positioning gap

The market’s attention is focused on American data this week, but there’s something only those with a trained eye may be looking at: Gold and Silver positioning gap. Financial markets are moving on fears, mostly related to persistently high energy prices driven by the Middle East war. Sure, the US Dollar (USD) is strong, but at what cost?