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The U.S. dollar strengthened against the Japanese yen after falling nearly 100pips on Monday, but as risk trends continue to dictate price action in the forex market, the technical forecast favors a bearish outlook for the USDJPY.
Currency Pair: USD/JPY
Chart: 60 Min Charts
Short-Term Bias: Bearish
Analysis Update
The Japanese yen pushed higher against the U.S. dollar during the overnight session, and the pair is likely to fall lower during the next 24 hours of trading as investors continue to curb their appetite for risk. Over the remainder of the week, I expect the dollar-yen to hold its bearish trend, and we may see the pair work its way towards 88.70-80 (78.6% Fib) to test for short-term support, however a break below this level could drag the pair towards the 12/17 low of 87.14 over the near-term. Meanwhile, the fundamental event risks scheduled for the next 24 hours may call for a change in our outlook.
Analysis
The U.S. dollar strengthened against the Japanese yen after falling nearly 100pips on Monday, but as risk trends continue to dictate price action in the forex market, the technical forecast favors a bearish outlook for the USDJPY. After reaching a low of 87.14 in December, the pair pushed higher to reach 94.61 on 1/6, but the sharp retracement from the January high suggests that investors remain risk adverse. As a result, I expect the pair to hold its bearish trend over the near-term, but the recent strength in the greenback could lead the pair to fill in the gap from the 120 SMA. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
To contact the author of this article, please email: dsong@fxcm.com
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