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US/Japan technical analysis: The bearish reversal has been established! Bears are ready for a bigger downtrend

January 11, 2019 00:06
source: FX168

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On Thursday (January 10), at the beginning of the European market, USD/JPY was at around 107.85. During the day, the exchange rate extended all the way down, and the intraday low reached 107.76.

For the next trend of USD/JPY, FXStreetAnalystOmkar Godbole's latest article, making technical analysis and predictions. The main contents are as follows:

USD/JPY may start a deeper retracement in the short-term due to the expectation of the Fed's latest meeting minutes to re-suspend interest rate hikes.

The minutes of the meeting showed that many officials said that the Federal Open Market Committee has the ability to be patient with further tightening policies, especially in an environment of weakened inflationary pressures.

It is worth noting that this dove transformation is driven by market turmoil and global economic growth concerns. In fact, the Fed is dependent on economic data, and if the upcoming data portrays the positive prospects of the US economy, it may become tough again.

However, other major central banks, especially the European Central Bank (ECB), are approachingcurrencyThe policy is normalized, and the normalization process can be successfully initiated only when the financial environment continues to be loose (the Fed has suspended the tightening on Thursday). Therefore, the Fed has almost no room to raise interest rates at a faster rate.

At the same time, it is worth noting that the Fed policy has become sensitive to stock market volatility. In short, the dollar is no longer a safe currency, and the increase in risk aversion will increase the possibility of suspending interest rate hikes (or interest rate cuts).

In addition, the technical chart also indicates a USD/JPY bearish preference.

USD/JPY daily chart

(USD/JPY daily chart source: FXStreet, FX168 Financial Network)

On the daily chart, USD/JPY has gone out of a cross star on Tuesday (January 8), and the exchange rate fell on the following trading day, confirming the bearish reversal of the cross or correcting the end of the rebound trend. .

In addition, the bearish reversal pattern of USD/JPY is formed on the downside 10-day moving average, which strengthens the bearish preference indicated by the downside moving average.

However, on the 14th, the RSI is in an oversold area, and the action under MACD can be weakened.

In view of this, the initial USD/JPY is limited to above 107.00.

As long as USD/JPY continues to be constrained below the 100-day moving average resistance, the overall bearish preference will remain unchanged.

(Article source: FX168)

                (Editor: DF392)

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