Japanese yen fell against the US dollar for the second day in a row.
The Japanese Yen (JPY) begins the new week on the back foot against the US dollar. Albeit with little follow-through and still well within striking distance of its best level since late July. Which was reached last week. Following the Federal Reserve’s decision. The risk-on rise in global equities markets has continued unabated. The Federal Reserve (Fed) made a dovish swing last week. Furthermore, the bullish view from China’s Central Finance Office enhances investor confidence. And serves as a crucial component eroding the safe-haven JPY.
Meanwhile, prominent Fed officials – New York Fed President John Williams. And Atlanta Fed President Raphael Bostic tried to calm concerns about early interest rate decreases on Friday. The markets. On the other hand, appear convinced that the US central bank would begin easing policies by the first half of 2024. Preventing the USD from building on Friday’s recovery from a four-month low. Furthermore, expectations that the Bank of Japan (BoJ) will end loose monetary policy in early 2024 keep the USDJPY pair at the mid-142.00s during the Asian session.
The existing risk-on atmosphere is viewed as a significant element eroding the safe-haven JPY.
Traders may also avoid taking aggressive directional bets in favor of waiting for the highly anticipated BoJ monetary policy decision, which is due to be announced during the Asian session on Tuesday. As a result, some caution is warranted before concluding that the USDJPY pair has formed a near-term bottom around the 141.00 area. In the run-up to the significant central bank event risk. Traders will look to broader risk sentiment and USD price dynamics on Monday, in the absence of any relevant macroeconomic data.
Japanese yen Technical Outlook
Japanese yen remained stuck near the 200-day SMA, indicating that the pair is not yet out of the woods.
Technically, last week’s fall and close below the critical 200-day Simple Moving Average (SMA) was viewed as a new trigger for bearish traders. Furthermore, the USDJPY pair’s inability to break above the aforementioned support-turned-resistance level. Which is currently around 142.55. Validates the bearish perspective. However, the Relative Strength Index (RSI) on the daily chart stays closer to oversold territory, suggesting. That some near-term consolidation or a tiny rally is in order before the next leg down.
Meanwhile, any further rise is likely to attract new sellers at the 142.75-142.80 zone. With the price remaining capped near the 143.00 round figure. However, any follow through purchasing might spark a short covering rebound. Allowing the USDJPY pair to retake the 144.00 level. On the other hand, the 142.00 round number now appears to safeguard the immediate downside ahead of the 141.40-141.35 range. Below which spot prices are expected to fall. may retest sub-141.00 levels. Or a multi-month low reached last Thursday. The subsequent decline has the potential to push the pair further closer to the 140.00 psychological level.
