Technical Analysis: USD/JPY ready for further losses

The US dollar closed Wednesday with a negative tone against the Japanese Yen, and it is now falling for the third day in a row. The USD/JPY is currently trading at 110.45, 0.03% negative on Thursday so far.

USDJPY 4-hour chart July 4

USDJPY 4-hour chart July 5

USD/JPY is extending a rejection from the dynamic resistance at 111.13 as it was tested on July 3. The pair’s decline is contained by the 20-day moving average at 110.45, at least for now.

Japanese Yen looks ready to put more gains versus the dollar mostly due to the current Greenback weakness. A mix of news between Trump’s tariffs and a reaction after ECB rate hikes speculations put the USD under pressure.

As a context, the Dollar index is performing a double top at 95.50, and it is now trading 100 pips down at 94.50. The 20-day moving average still supports it at 94.55.

Back to the Dollar-yen, the 4-hour chart shows a USD/JPY technically bearish with moving averages slowly turning to the downside. Momentum points to the south too.

To the upside, if the pair consolidates current levels above 110.40, it will need a close above the 110.60 level to confirm some bullishness. The break of 110.80 would trigger a short covering that would push the pair to a retest of the dynamic resistance.

On the downside, a break below the intra-day support at 110.40 would open the door for a retest of the July 3 low at 110.30. Below that, a dynamic support round 109.80 is waiting for the pair.

In the long term picture, USD/JPY is trading in an asymmetrical triangle with a confluence of flat moving averages. The pair looks neutral, and a break of the triangle is needed to define future directions.

USDJPY Daily chart July 5

USDJPY Daily chart July 5

Levels to watch are 111.10 and 111.40 to the upside, while an evident higher low formation can be seen at 109.40 and 108.40.

Remember that a higher low may signal a consolidated uptrend; however, if you pay attention, the upper side of the triangle is also performing a kind of lower high, indicating a downtrend. What will prevail? Time will say.

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