USDJPY falls back below the 200 day MA and 38.2% retracement
The USDJPY – over the last 6 trading days – has seen price action trade above and below the 38.2% of the 2023 trading range and the 200-day MA at 142.47 to 142.70 respectively.
Yesterday, the price traded the whole day above those levels after Tuesday’s run higher (after the BOJ run up on Tuesday), but today with the USDs decline, the pair is back below those two key technical levels. The bears are taking back control off the daily chart.
Fundamentally, as we head toward 2024, the storyline remains that the Fed is leaning toward easing in 2024 while the BOJ may look to tighten finally. However, that has been the storyline for a while, and the USDJPY pair is ONLY just above and below the 38.2% of the 2023 range. Remember, the USDJPY moved sharply higher in 2023 on the back of the Fed continuing to pushed rates sharply higher, while the BOJ did little to nothing.
When the story line is well known and the price action is still limited, it is important to let the technicals tell the story.
Currently, the price is below the two technical levels at 142.47 and 142.70. The bears are in control.
Going forward, the more bearish argument would now require the pair to put more room between the price and the technical levels. The next targets are to get to and through the 140.93 to 141.54 area (see green numbered circles). Yes, that swatch is wide but has been home to a number of swing lows and highs during a consolidation time from May to July (see green numbered circles). To increase the bearish bias, getting below that area is needed. Move below that area, and the 50% midpoint at 139.559 becomes the next major target on the daily chart.
Of course, if the price were to get back above the 200-day MA at 142.70, all bets are off and the buyers are back in control. On that move, the 144.47 to 144.98 would be the next upside targets (see red numbered circles).