After an impressive 1700-pip surge in just 7 weeks, USD/JPY is showing signs of losing momentum over the past couple of weeks.
The rally was driven by expectations of more aggressive interest rate hikes from the Federal Reserve, but with inflation showing signs of ebbing slightly and traders fully discounting nearly another 200bps of tightening from the FOMC, that theme may be played out by now.
Technically speaking, the pair has espnt this week testing the bottom of its 6-week range near 127.00, with bulls unable to muster a meaningful bounce thus far. Meanwhile, the RSI indicator has been in a bearish channel for weeks, signaling fading buying pressure; the MACD indicator's imminent cross back below the 0 line confirms that fading momentum.
If we do see a confirmed break below 127.00, bears will look to 50-day EMA around 126.00, followed by the Fibonacci retracements of the March-April rally starting around 125.00 (38.2%), 123.00 (50%) and 121.00 (61.8%)
The rally was driven by expectations of more aggressive interest rate hikes from the Federal Reserve, but with inflation showing signs of ebbing slightly and traders fully discounting nearly another 200bps of tightening from the FOMC, that theme may be played out by now.
Technically speaking, the pair has espnt this week testing the bottom of its 6-week range near 127.00, with bulls unable to muster a meaningful bounce thus far. Meanwhile, the RSI indicator has been in a bearish channel for weeks, signaling fading buying pressure; the MACD indicator's imminent cross back below the 0 line confirms that fading momentum.
If we do see a confirmed break below 127.00, bears will look to 50-day EMA around 126.00, followed by the Fibonacci retracements of the March-April rally starting around 125.00 (38.2%), 123.00 (50%) and 121.00 (61.8%)