USD/JPY Halts Three-Day Selloff to Keep RSI Above Oversold Zone
USD/JPY halts a three-day selloff to keep the Relative Strength Index (RSI) above 30.
Share this:
US Dollar Outlook: USD/JPY
USD/JPY halts a three-day selloff to keep the Relative Strength Index (RSI) above 30, and the oscillator may show the bearish momentum abating as it appears to be reversing ahead of oversold territory.
USD/JPY Halts Three-Day Selloff to Keep RSI Above Oversold Zone
In turn, USD/JPY may defend the December low (148.65) as it rebounds from a fresh monthly low (148.85), and the exchange rate may further retrace the decline from earlier this month as the Federal Reserve insists that ‘we do not need to be in a hurry to adjust our policy stance.’
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
However, the rebound in USD/JPY may turn out to be temporary as it extends the series of lower highs and lows from last week, and developments coming out of the US may sway the exchange rate as the Personal Consumption Expenditure (PCE) Price Index is anticipated to show slowing inflation.
US Economic Calendar
The core PCE, the Fed’s preferred gauge for inflation, is seen narrowing to 2.6% in January from 2.8% per annum the month prior, and USD/JPY may struggle to hold its ground ahead of the next Federal Open Market Committee (FOMC) meeting in March as speculation for lower US interest rates is likely to influence the carry trade.
At the same time, a higher-than-expected PCE print may push the Fed to further combat inflation as the US economy shows little signs of a recession, and USD/JPY may attempt to retrace the decline from earlier this month should the RSI continue to hold above oversold territory.
With that said, USD/JPY may snap the recent series of lower highs and lows should it extend the rebound from the monthly low (148.85), but failure to defend the December low (148.65) may push the exchange rate towards the October low (142.97).
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY extends the recent series of lower highs and lows to register a fresh monthly low (148.85), with a close below the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone raising the scope for a move towards the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region.
- Next area of interest comes in around the October low (142.97), but USD/JPY may track the flattening slope in the 50-Day SMA (154.97) if it continues to hold above the December low (148.65).
- Need a move back above 151.95 (2022 high) to bring 153.80 (23.6% Fibonacci retracement) on the radar, with the next area of interest coming in around the monthly high (155.89).
Additional Market Outlooks
US Dollar Forecast: GBP/USD Approaches Channel Resistance
Canadian Dollar Forecast: USD/CAD Coils Ahead of Trump Tariffs
Gold Price Rallies to Fresh Record High to Push RSI Back Above 70
AUD/USD Clears January High to Trade in Ascending Channel
--- 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
US Dollar Price Action Setups in Central Bank Week
We’ve heard from the Fed, ECB and BoC with the BoJ up next later tonight and DXY trajectory hangs in the balance depending on how hawkish the Bank of Japan might turn out to be.
Gold forecast: XAU/USD struggles as traders eye breakdown
After a three-day recovery, gold prices have fallen in excess of 1.2% so far today, as the metal continues to hover around the $4,000 level. Today’s bearish price action threatens this key level, especially when you consider last week’s 4% sell-off. For now, gold is hanging around this psychological threshold, but it remains to be seen whether it will hold for too long.
Nasdaq 100 forecast: Alphabet results reignite AI concerns
Disappointing results from a couple of major global technology names have put the AI trade back under scrutiny, with Nasdaq 100 futures falling around 1% after giving up the post-FOMC gains seen overnight. For now, our short-term Nasdaq 100 forecast remains more on the cautious side of things than outright bearish. The index remains close to its record highs and continues to find dip buyers. But could that change soon?
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.