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USD/JPY: Dollar Bulls May Be Running Low on Steam

USD/JPY: Dollar Bulls May Be Running Low on Steam

Peter Hanks, Strategist

Technical Forecast for Japanese Yen: Neutral

Talking Points:

  • Daily USDJPY chart shows the pair testing a trend line from August 2015
  • Daily chart shows RSI moving into oversold territory, currently around 45
  • A series of lower highs and lower lows may suggest dollar bears can take over

Check out our Client Sentiment Page to see where clients are positioned for different pairs.

The Dollar-Yen pair continued to travel nowhere quickly this week, but a series of lower highs and lows may mean bulls are running out of steam. Falling off of levels near the 2018 open in mid-July, the dollar has shed some ground in recent weeks.

USD/JPY Price Chart 24-Hour Time Frame, January 2017 to Present

Early this week, a move higher was attempted but ultimately reversed as the pair tested a trend line originating in August 2015 on Friday but ultimately closed above. The consistent inability for the pair to move higher after its most recent top in mid-July and a falling RSI may combine to build up some bearish conviction. Should USDJPY fall below the trend line around 110.40 next week, we would likely see the pair continue lower.

The current price level also moves nearer to the .382 Fibonacci level from early January 2017. If the trend-line support is broken, the .382 level would be the next significant support point for the pair to probe should it look to continue lower.

IG Client Sentiment

Client positioning on the pair offers a pretty opaque view, with a slight bias of traders remaining net-long. With clients net-long, the contrarian approach we typically take at DailyFX would further bolster a bearish argument for the dollar-yen.

DailyFX forecasts on a variety of currencies such as the US Dollar or the Yen are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introduction to the Forex market, check out our New to FX Guide.

--Written by Peter Hanks, Junior Analyst for

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.