Taking a Break
The USD/JPY currency pair is presently seeing some halt after a stalwart rally as the pair is giving some feeders of exhaustion after it reached levels where it became too stretched. The currency pair has printed a high point of twenty years at 131.25 early on Thursday, and it is also seeing some booking of profits as the indicators for the market speed have become absolutely overbought with the intraday period.
USD/JPY price chart. Source TradingView
The major pair is contending with a set of barricades just after it reached 61.8% Fibonacci, which was placed from the 19th of April’s high point at 129.41 down to the weekly low point at 126.95. it was equally around the point of resistance at 131.00. One can see the exhaustion as it is evident in the 130.40 to 131.25 range. The currency pair has slid underneath the exponential moving average of the 20-day period at 130.56, as it adds to the downward spiral.
There has also been a shift in the relative strength index from a range of bullish territory of 60.00-80.00 down to the range of consolidation of 40.00-60.00. This change from a bullish territory indicates that there has been a general loss and lack of investor confidence in the US dollar for a little time now.
In the future, any further slide going under the psychological support line of 130.00 is going to pull the pair down the path of the 19th of April’s high point, which was just at 12.941, and then down to the low point of the 20th of April at 127.46.
On the other side, bullish traders of the US dollar might be in the proper position to return to its upward trajectory if it happens to get beyond the twenty-year high point at 131.25. such development would send the USD/JPY currency pair in the direction of the resistance of the round level at 132.00. any breach that occurs in the latter is going to send the pair in the direction of the 4th of April’s high point at 133.16.
In other developments, financial analysts with Goldman Sachs are of the opinion that the Japanese Yen’s decline might continue in the midst of the Bank of Japan’s dovish policy. They added that foreign exchange interventions in the economy are going to have very minimal to no impact on salvaging the slide of the Yen.