Time Zone: GMT +3
Time Frame: 4 Hours (H4)
Fundamental Analysis:
The USD-JPY currency pair is impacted today by critical economic releases from both the United States and Japan. From the U.S. side, the upcoming speech by Federal Reserve Governor Adriana Kugler titled “Inflation Dynamics and the Phillips Curve” could trigger volatility, particularly if her comments imply future monetary policy tightening. Additionally, U.S. consumer credit data will provide insights into consumer confidence and financial stability, influencing the strength of the USD. On the Japanese front, the release of Labor Cash Earnings and the Cabinet Office’s composite index will offer clarity on Japan’s economic health, potentially influencing the JPY through market expectations of consumer spending and overall economic conditions.
Price Action:
The USDJPY H4 timeframe has clearly broken the previous key support level, initiating a significant bearish trend. Price action has twice pulled back to retest the broken support line, confirming its role as a new resistance before continuing sharply downward. Despite recent bullish candles, the market gap at the opening signals a strong selling pressure and continued bearish sentiment. If bearish momentum persists, traders should look to Fibonacci extension levels, notably the 161.8% extension, as potential targets for the ongoing downtrend.
Key Technical Indicators:
Parabolic SAR: The last two dots appear below the current price, indicating a potential short-term bullish correction after the strong bearish momentum. Traders should monitor closely for a reversal of the indicator dots back above the price as confirmation of renewed selling pressure.
Bollinger Bands: Price recently pierced the lower Bollinger Band, indicating oversold conditions, followed by a corrective bounce back towards the midline. However, the overall widening of the bands suggests ongoing volatility and potential continuation of the bearish trend once price approaches resistance areas.
MACD (Moving Average Convergence Divergence): The MACD histogram shows diminishing bearish momentum, signaling a potential short-term bullish correction. Nevertheless, the MACD line remains deeply below the zero line, indicating a prevailing bearish trend. Traders should remain alert to renewed bearish momentum.
RSI (Relative Strength Index): RSI currently stands at 36.27, recovering slightly from oversold territory. While indicating potential for further upside correction, RSI still emphasizes a prevailing bearish trend, cautioning traders to remain vigilant for resumed downward movement.
%R (Williams Percent Range): The %R indicator currently at -82.11 shows the market is still near oversold levels despite the recent minor upward correction. This highlights the possibility of limited upward corrections before a renewed downward push.
Support and Resistance:
Support: Immediate significant support is at the recent low around 144.930. Breaking below this could lead to testing the Fibonacci 161.8% extension.
Resistance: Strong resistance is at the previous support-turned-resistance line at approximately 146.290, aligned with recent price action highs and Fibonacci retracement levels.
Conclusion and Consideration:
USD vs. JPY analysis on the H4 chart indicates robust bearish momentum supported by technical indicators despite short-term bullish corrections. Upcoming economic events for both currencies could introduce substantial volatility, affecting the pair’s direction significantly. Traders should be cautious of short-term bullish retracements and closely monitor resistance and support levels for potential breakout opportunities.
Disclaimer: The analysis provided for USD/JPY is for informational purposes only and does not constitute investment advice. Traders are encouraged to perform their own analysis and research before making any trading decisions on USDJPY. Market conditions can change quickly, so staying informed with the latest data is essential.
