- USDJPY falls to three-week low after Powell confirms shift to rate cuts
- The latest decline looks overdone; support at 143.40
USDJPY has been trending to the downside after completing a bearish rising wedge in the four-hour chart, and Powell’s dovish speech at Jackson Hole further strengthened selling incentives on Friday, pressing the price to a three-week low of 143.43.
The 143.40 region was a key constraint to downside movements at the start of the year and could again protect the market from a drop to 141.70-142.20 as it did earlier this month. Note that the RSI and the stochastic oscillator are flattening in the oversold region. Hence a rebound cannot be ruled out. Otherwise, the bears could target the 137.70-138.50 territory last seen in July 2023 if the August trough of 141.74 gives way.
If the pair enters a new recovery phase, resistance could initially emerge between 144.85 and 145.45, where a couple of trendlines and the 20-period SMA are positioned. The 50-period SMA could be the next barrier along with the 23.6% Fibonacci retracement of the July-August down leg at 146.45. Should the bulls dominate there, the price could spike up to 148.00 or higher to 149.40, while the 200-period SMA at 151.14, which rejected an upside reversal in mid-July, could be critical for a continuation higher.
In brief, USDJPY could face some stability in the coming sessions as the familiar 149.40 support territory is under examination and oversold signals are clear. Failure to rotate there might threaten a bearish breakout below 141.70.
Source by: XM Global