The USDJPY pair experienced a significant drop to a six-week low on Friday, driven by increased expectations of a Bank of Japan rate hike following a higher than expected inflation rise in Tokyo for November. This led to a break below key support levels at 150.18/00, with the potential for further downside towards the next strong support at 149.21.
Despite the bearish tone on the daily chart, with negative momentum strengthening and a possible 5/200DMA death cross formation, there are conflicting signals from the rising daily cloud and oversold stochastic. The pair’s reaction at the 150 support zone will be crucial in determining the near-term direction, with a bearish bias expected below the 200DMA at 151.98.
On the weekly chart, there is a predominantly bullish technical structure, although the pair is on track for a significant weekly loss after eight consecutive weeks of gains. This raises the possibility of two scenarios unfolding – a failure at the 150 zone followed by a bounce signaling a healthy correction before the bulls regain control, or a deeper correction of the rally spanning over two months.
Key resistance levels to watch include 150.45, 150.74, 151.28, and 151.95, while important support levels are at 149.52, 149.21, 148.71, and 148.16. Traders should pay close attention to market developments and be prepared for potential volatility in the coming sessions.
Disclaimer: The information provided in this article is based on sources believed to be reliable, but its accuracy and completeness cannot be guaranteed. Any opinions expressed are subject to change without notice, and readers are advised to conduct their own research before making any investment decisions. No liability is accepted for any losses incurred as a result of using this information.
