The USDJPY pair navigates a murky path today, influenced by conflicting forces. On the one hand, intervention fears linger after Japanese authorities expressed concern about the recent depreciation of the Yen. This sentiment, coupled with a generally risk-averse market environment, provides support for the safe-haven JPY.
However, the BoJ’s dovish stance regarding monetary policy, compounded by Japan’s technical recession, casts a shadow on the JPY’s long-term outlook. Investors remain hesitant to place aggressive bets on the Yen, unsure of the timing for an exit from the ultra-loose policy.
On the USD side, softening Treasury yields and bets on Fed rate cuts in the coming months weigh down the Greenback. Traders eagerly await the release of the FOMC minutes, hoping for further clues about the Fed’s rate-cut path and its impact on the USD.
Technical Analysis:
On the 4-hour chart, the USDJPY trades around 150.075, trading within a symmetrical triangle pattern, currently near the 20-SMA (green line) and 50-SMA (blue line). 20-SMA above the upward-sloping 50-SMA and 100-SMA, indicating positive short-term momentum.
The RSI sits flat at around 50, suggesting neutral momentum. Short-term trading opportunities could exist towards the resistance level at the 150.425 price level should the price action push above the triangle. A break above the initial resistance could confirm the bullish momentum, likely bringing the 150.885 resistance level into play.
However, a successful push below the triangle could offer short-term trading opportunities towards the initial support at 148.999 should the 23.60% Fibonacci retracement level fail to give significant support. A break below the 148.999 level would likely bring the 50.00% Fibonacci retracement level (148.390) and 61.80% Fibonacci retracement level (147.802) support levels into play in the short term.
Summary
The AUDUSD’s short-term direction remains uncertain. Bullish factors like a cautious RBA and China’s rate cut might be countered by the USD’s strength and domestic headwinds. Technically, the flat RSI indicates potential price stability near key support and resistance levels. Breakout or breakdown from these levels could trigger short-term trading opportunities within a 0.65969-0.64427 range.
Sources: TradingView, Trading Economics, Dow Jones Newswire, Reuters.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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