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10/09/24
26
USD/JPY Rally Faces Resistance Amid Cautious Market Sentiment
The USD/JPY currency pair is experiencing a modest rally for the second consecutive day, trading in the mid-143.00s as the European session unfolds. Despite this uptick, the pair is struggling to demonstrate robust bullish momentum, remaining below the previous session’s high. Many traders appear to be adopting a cautious approach as they await key US inflation data later in the week, which could greatly influence market direction.
The Japanese Yen is facing downward pressure, particularly due to a revision in the second-quarter Gross Domestic Product (GDP) figures. This economic deterioration is providing some support for the USD/JPY pair, amid a slight rise in the US Dollar. However, differing monetary policy expectations between the Federal Reserve and the Bank of Japan are making investors hesitant to engage in aggressive bullish positions, limiting the upside potential for the currency pair.
From a technical standpoint, the recent downward trend observed over the past month has established a descending channel, signaling a prevailing short-term downtrend. Indicators suggest that any rallies could be short-lived, as oscillators remain deeply entrenched in negative territory and are distant from oversold conditions. Thus, further upward movements are likely to face selling pressure, particularly near the crucial resistance level of 144.00.
Should momentum increase and buying interest strengthen, a short-covering rally could potentially push the USD/JPY towards the 144.55 level and potentially up to the psychological barrier of 145.00. Further gains might extend towards the 145.60 resistance zone. Conversely, support is anticipated around 143.20, with the next inflection point at 143.00. A breach of these levels could lead to a confirmed negative bias, exposing the pair to further declines toward 142.00 and possibly the seven-month low of around 141.70 – 141.65 experienced in August.
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