USD/JPY Reflects Bearish Price Series amid Failed Test of March High
USD/JPY reflects a series of lower highs and lows after failing to test the March high (151.31).
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US Dollar Outlook: USD/JPY
USD/JPY reflects a series of lower highs and lows after failing to test the March high (151.31), with the weakness in the exchange rate pulling the Relative Strength Index (RSI) back from its highest reading since December.
USD/JPY Reflects Bearish Price Series amid Failed Test of March High
The reaction to the weaker-than-expected US Non-Farm Payrolls (NFP) report may indicate a potential inflection point for USD/JPY as the 73K rise in July puts pressure on the Federal Reserve to further unwind its restrictive policy.
In turn, the US Dollar may face additional headwinds ahead of the Fed’s September meeting amid growing speculation for a rate-cut, and USD/JPY may struggle to retain the rebound from the July low (142.68) as the central bank appears to be on track to further unwind its restrictive policy later this year.
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Nevertheless, the ongoing transition in US trade policy may keep the Federal Open Market Committee (FOMC) on the sidelines as Chairman Jerome Powell emphasizes that ‘we are well positioned to learn more about the likely course of the economy and the evolving balance of risks before adjusting our policy stance,’ and swings in the carry trade may continue to sway USD/JPY should the central bank keep US interest rates higher for longer.
With that said, the bearish price series may unravel should USDJPY extend the rebound from the weekly low (146.62), but the failed attempt to test the March high (151.31) may lead to a broader correction in the exchange rate as the RSI seems to be reversing ahead of overbought territory.
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY rebounds from a fresh weekly low (146.62) to trade back above 147.10 (38.2% Fibonacci retracement), and a move/close above 148.70 (38.2% Fibonacci retracement) may push the exchange rate toward 150.30 (61.8% Fibonacci extension).
- Next area of interest comes in around the monthly high (150.92), but USD/JPY may continue to carve a series of lower highs and lows should it struggle to hold above 147.10 (38.2% Fibonacci retracement).
- Need a move/close below 145.90 (50% Fibonacci extension) to bring the 144.40 (23.6% Fibonacci retracement) to 144.60 (50% Fibonacci extension) region on the radar, with the next area of interest coming in around the July low (142.68).
Additional Market Outlooks
Canadian Dollar Forecast: USD/CAD Coils Ahead of Canada Employment
Gold Price Climbs Toward July High
Australian Dollar Forecast: AUD/USD Holds Above June Low
British Pound Forecast: GBP/USD Defends Rebound from May Low
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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