USDJPY To Breach Below 127.60

The US dollar index surged on the open as China announced a new wave of COVID-19 lockdowns along with cutting FX reserve requirements. On the other hand, US grapples with higher inflation.

USDJPY certainly has benefited from the surge in the dollar index (DXY), but this seems to be levelling off. After price failed to trade to a new higher high, I'm currently watching a neckline breach at the 127.60 level. If price successfully breaches and holds below this level, I do expect further downside momentum ahead.