USD/JPY Price Analysis: Rising wedge confirmation, upbeat Japan inflation and softer yields favor bears
- USD/JPY extends the previous day’s pullback from YTD high, stays pressured near intraday low of late.
- Confirmation of bearish chart formation, pullback in yields and upbeat Japan inflation data keep Yen pair sellers hopeful.
- Seven-week-old horizontal support, 200-SMA prod sellers on their way to 137.50 theoretical target of rising wedge.
- Yen pair’s recovery needs validation from 147.00 and yields.
USD/JPY remains on the back foot for the second consecutive day after refreshing the Year-To-Date (YTD) high, pressured around 145.50 amid early Friday morning in Europe, as market players seek more clues amid a lackluster end of the week. Also challenging the Yen pair’s latest weakness, despite the technical confirmation, is the trader’s preparations for the next week’s top-tier central bankers’ speeches at the Jackson Hole Symposium.
That said, Japan’s upbeat prints of the National Consumer Price Index (CPI) for July join the confirmation of a three-week-old rising wedge bearish chart formation, as well as a pullback in the US Treasury bond yields to lure the USD/JPY sellers.
Also read: Japan inflation: National CPI reprints 3.3% YoY in July, USD/JPY bounces off intraday low towards 146
Furthermore, a pullback in the RSI (14) line from overbought territory joins the bearish MACD signals to keep the sellers hopeful.
However, a horizontal area comprising multiple levels marked since late June, around 145.10–144.90, challenges the immediate downside of the Yen pair.
Following that, the 200-SMA surrounding 142.00 and the 140.00 round figure will be the last defenses of the USD/JPY buyers before directing the quote toward the theoretical target of the rising wedge confirmation, near 137.50.
Alternatively, USD/JPY buyers need to defy the rising wedge formation by crossing the stated bearish pattern’s top line, close to 146.90, to retake control. Also acting as the upside filter is the 147.00 round figure.
USD/JPY: Four-hour chart
Trend: Further downside expected