Japanese Yen (JPY) Outlook: USD/JPY Poised For a Breakout
USD/JPY Price, News and Analysis:
- USD/JPY continues to push lower.
- The 200-day moving average may not hold.
The Japanese Yen is Benefitting from the Recent US Dollar Sell-Off
Volatile price-swings in USD/JPY has seen the pair trade sell-off from its recent 11-month high of 112.25 down to a multi-year spike low of 101.12 and back up to near 112.00 again all in five weeks. A combination of risk-on and risk-off markets and the on-off strength of the US dollar has initiated multiple oversized candles, driving volatility to a three-year peak. Conditions are likely to remain volatile ahead of the end of the Japanese financial year on March 31.
The recent ‘V-shaped’ recovery in USD/JPY fell just short of target before the pair turned lower again. Friday’s extension of the sell-off has seen both the 50- and 200-day moving averages breached, and a convincing break and close below the longer-dated dma would add to the current bearish market sentiment and suggest a medium-term target around 104.50 to 105.00. It may need a fundamental driver to take prices lower, namely a further breakdown in the strength of the US dollar. To the upside, rallies should find initial resistance around the 109.50 – 109.70 level, before big figure resistance at 110.00.
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USD/JPY Daily Price Chart (July 2019 - March 27, 2020)
The weekly chart shows that a long-running series of lower highs remain intact, suggesting further downside. Support at 104.42, the late April 2019 swing-low has only been broken by the March sell-off candle and aided in the recovery of USD/JPY afterwards.
USD/JPY Weekly Price Chart (June 2016 – March 27, 2020)
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