It is observed that the USD/JPY currency pair is currently experiencing a bearish momentum, and it is hovering near a critical support level in the 138.650 range. This indicates that there is significant selling pressure in the market, and the price action is below both the 200- and 50-Day Moving Averages, signaling a bearish trend with a range-bound outlook.
Scenario 1: In this scenario, there is a possibility of a bullish move in the USD/JPY pair. If the price manages to break above the immediate resistance at 139.480, it could potentially test the level of 139.679. Should the bullishness persist, the price might advance further to challenge the resistance zone between 139.931 to 140.260, which corresponds to the top of the resistance level. The ultimate hurdle for the bulls lies at the 140.918 level, representing the topmost resistance.
Scenario 2: On the other hand, there is an alternative scenario where the price could decline to test the support level at 137.913. If this level is successfully breached, it may lead to further downside movement towards the 137.650 level. Subsequent support levels to monitor include 137.357 and 137.077. A crucial level to watch closely is the previous low at 137.273, as it could act as a significant support level.
Currently, the market is exhibiting a bearish momentum, and the Relative Strength Index (RSI) is nearing the overbought region. This indicates that the market is approaching a point where a bearish reversal may be likely. Traders should be cautious and attentive to the RSI’s behavior to confirm a potential shift in the market sentiment.
Regarding the BOJ (Bank of Japan) Interest Rate Decision, it can have a substantial impact on the USD/JPY currency pair. A high-impact event like this, with the central bank’s decision to keep the interest rate unchanged at -0.10%, suggests that the BOJ is maintaining its accommodative monetary policy. This decision may influence investors’ perception of the Japanese Yen’s strength and its attractiveness for carry trades, where investors borrow in low-interest-rate currencies like the Yen to invest in higher-yielding assets denominated in other currencies like the USD.
If the BOJ’s decision surprises the market, such as unexpectedly changing the interest rate or providing guidance on future policy actions, it could lead to significant fluctuations in the USD/JPY pair. For example, if the BOJ hints at possible tightening in the future, the Yen may strengthen, causing the USD/JPY pair to decline. Conversely, if the central bank signals further monetary easing, the Yen may weaken, potentially pushing the USD/JPY pair higher.
Key levels to watch are 137.913,137.650,137.077,140.260,140.918