USD/JPY Decline Persists amid US Credit Rating Downgrade
USD/JPY extends the series of lower highs and lows from last week as Moody’s cuts its US credit rating from Aaa to Aa1.
Share this:
US Dollar Outlook: USD/JPY
USD/JPY extends the series of lower highs and lows from last week as Moody’s cuts its US credit rating from Aaa to Aa1, and the exchange rate may continue to give back rebound from the monthly low (142.36) as the ongoing shift in US fiscal policy clouds the outlook for the economy.
USD/JPY Decline Persists amid US Credit Rating Downgrade
USD/JPY trades back below the 50-Day SMA (146.10) as Moody’s warns that ‘the US' fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns,’ and it seems as though the push above the moving average was temporary as the exchange rate reverses ahead of the April high (150.49).
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
In turn, USD/JPY may continue to reflect a bearish price series as fears of a slowing economy puts pressure on the Federal Reserve to further unwind its restrictive policy, and the US Dollar may face additional headwinds ahead of the next Fed meeting in June even as the Trump administration tries to avoid a trade war.
With that said, the decline in USD/JPY may persist as the downgrade in the US credit rating drags on the Greenback, but the exchange rate may threaten the bearish price series should it defend the advance from the monthly low (142.36).
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY carves a series of lower highs and lows after struggling to push above the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone, and lack of momentum to hold above the 144.40 (23.6% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region may push the exchange rate toward the monthly low (142.36).
- Next area of interest comes in around 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension), but USD/JPY may consolidate over the coming days should it defend the advance from the monthly low (142.36).
- Need a move above 145.90 (50% Fibonacci extension) for USD/JPY to threaten the bearish price series, with a move above 147.10 (38.2% Fibonacci retracement) bringing the monthly high (148.65) on the radar.
Additional Market Outlooks
Canadian Dollar Forecast: USD/CAD Defends Weekly Low Ahead of Canada CPI
Gold Price Struggles to Close Below 50-Day SMA
GBP/USD Defends Rebound from Weekly Low to Hold Above 50-Day SMA
Australian Dollar Forecast: AUD/USD Defends V-Shape Recovery
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD forecast: Eurozone stagflation risks mount as dollar holds firm ahead of data
The dollar was bouncing back at the time of writing, after it had eased overnight on the back of some weaker-than-expected economic data yesterday which had prompted markets to scale back expectations of an October Fed rate hike. However, with more significant US data due today and Friday, and with oil prices continuing to remain elevated, the dollar’s broader direction remains bullish.
AUD/USD outlook: Aussie slips despite hawkish RBA ahead of key data
The AUD/USD was unable to benefit from the Reserve Bank of Australia’s 25-basis-point rate hike overnight. The RBA lifted the cash rate to 4.60%, in line with expectations. However, the Australian dollar weakened following the decision, with much of the Bank’s hawkish stance seemingly priced in ahead of the announcement. The US dollar has also remained largely supported following the recent turmoil in the bond markets.
RBA delivers 25bp hike, Bullock now the main event
The RBA delivered the expected 25bp hike, but Bullock’s press conference now looms as the bigger volatility risk for AUD/USD and the ASX 200.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.