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USD/JPY has sensed buying interest after dropping to near 127.20.
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USD index recovered near 101.60 despite upbeat market mood.
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Downward-sloping 20-and 50-EMAs indicate more weakness ahead.
The USD/JPY pair has retreated after sensing buying interest around 127.20 in the early European session. The asset has followed the footprints of the US Dollar Index (DXY) and has attempted a recovery. The USD Index has recovered to near 101.60 despite the upbeat market mood, which could result in a resumption of the downside journey.
Meanwhile, Japanese yen bulls are likely to dance to the tune of the Bank of Japan’s (BoJ) monetary policy, due to be announced on Wednesday. BOJ Haruhiko Kuroda’s comments will be closely watched amid growing chatter about exiting a decade-long ultra-loose monetary policy.
USD/JPY is declining towards horizontal support plotted at 126.36 on the daily scale since May 24. The downward sloping 20- and 50-period exponential moving averages (EMAs) at 132.10 and 135.36, respectively, add to the downside filters.
The Relative Strength Index (RSI) (14) is swinging in the bearish range of 20.00-40.00, showing no signs of divergence and oversold, which could lead to further weakness in the USD.
Going ahead, USD/JPY needs to drop below Monday’s low at 127.22, which will expose the asset for more downside towards the horizontal support plotted from May 24 low at 126.36. A slippage below the latter will open room for further downside toward the psychological support at 125.00.
On the flip side, a decisive move above December 20 low at 130.57 will drive the asset toward January 9 low at 131.31 followed by January 12 high at 132.56.
USD/JPY daily chart
USD/JPY
