USD/JPY Rebound Keeps RSI Above Oversold Zone Ahead of Fed Testimony
USD/JPY extends the rebound from the monthly low (150.93) to keep the Relative Strength Index (RSI) out of oversold territory.
Share this:
US Dollar Outlook: USD/JPY
USD/JPY extends the rebound from the monthly low (150.93) to keep the Relative Strength Index (RSI) out of oversold territory, but the semi-annual testimony with Federal Reserve Chairman Jerome Powell may sway the exchange rate as the central bank pursues a less restrictive policy.
USD/JPY Rebound Keeps RSI Above Oversold Zone Ahead of Fed Testimony
The recent selloff in USD/JPY seems to have stalled ahead of the December low (148.65) as it snaps the series of lower highs and lows from last week, and the exchange rate may attempt to retrace the decline from the start of the month amid the limited reaction to the weaker-than-expected US Non-Farm Payrolls (NFP) report.
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
US Economic Calendar
Nevertheless, fresh remarks from Chairman Powell may influence USD/JPY as the central bank pledges to ‘adjust our policy stance in a manner that best promotes our maximum-employment and price-stability goals,’ and it remains to be seen if the Federal Open Market Committee (FOMC) will respond to the ongoing change in US trade policy as President Donald Trump proposes a 25% tariff on imports of steel and aluminum.
In turn, more of the same from Chairman Powell may curb the rebound in USD/JPY should the Fed stay on track to implement lower US interest rates, but the prepared remarks for Congress may fuel the recent rebound in the exchange rate if the central bank adopts a less dovish forward guidance.
With that said, USD/JPY may stage a larger recovery over the coming days as it no longer carves a series of lower highs and lows, but the exchange rate may continue to give back the advance from the December low (148.65) as the RSI slips at its lowest level since September.
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY snaps the recent series of lower highs and lows as it extends the rebound from the monthly low (150.93), with a move above 153.80 (23.6% Fibonacci retracement) bringing the monthly high (155.89) on the radar.
- A break/close above 156.50 (78.6% Fibonacci extension) may push USD/JPY towards the January high (158.88), but a move below the opening range for February may lead to a test of the December low (148.65).
- A break/close below the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone opens up the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region, with the next area of interest coming in around the October low (142.97).
Additional Market Outlooks
Canadian Dollar Forecast: USD/CAD Remains Susceptible to Trump Tariffs
AUD/USD Recovery Stalls Ahead of January High
US Dollar Forecast: EUR/USD Snaps Back Ahead of January Low
Gold Record High Price Pushes RSI Into Overbought Zone
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
NFP Preview: Can the Jobs Report Overcome the Bond Market Meltdown Too?
Traders and economists expect the NFP report to show that the US created 90K net new jobs, with average hourly earnings rising 0.3% m/m (3.1% y/y) and the U3 unemployment rate at 4.1% - see what the leading indicators are suggesting!
Japanese Yen Outlook: USD/JPY, GBP/JPY, AUD/JPY Setups
USD/JPY and GBP/JPY show signs of stabilising, while AUD/JPY remains vulnerable as yen crosses deliver mixed technical signals.
EUR/USD Forecast: Euro Struggles to Find Support Even After U.S. PCE Data
The euro continues to face a challenging environment in the short term. The currency has struggled to regain ground against a U.S. dollar that remains firmly supported, a dynamic reflected in EUR/USD, which has now recorded three consecutive losing sessions and a decline of roughly 0.6%.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.