- USD/JPY seems vulnerable above 139.00 as the USD Index is losing its charm.
- BoJ Ueda said the central bank will discuss specifics of an exit policy when achievement of the price target is foreseen.
- USD/JPY is expected to display a sheer downside after a breakdown of the Descending Triangle pattern.
The USD/JPY pair is juggling in a narrow range above the crucial support of 139.00 in the Asian session. The asset seems vulnerable above the aforementioned support as the US Dollar Index is losing its charm. Where major central banks are gearing up for a fresh interest rate hike, investors are anticipating that the Federal Reserve (Fed) could pause its policy-tightening spell as the impact of interest rate hikes yet made has not passed.
The US Dollar Index (DXY) has witnessed some support after correcting to near 104.00. A squeeze in volatility for the USD Index is anticipated amid an absence of potential economic events this week.
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Meanwhile, the Japanese yen has got some strength as Bank of Japan (BoJ) Governor Kazuo Ueda said on Wednesday, “When achievement of price target is foreseen, we will discuss specifics of an exit policy and disclose information as needed.”
USD/JPY is on the verge of delivering a breakdown of the Descending Triangle chart pattern formed on an hourly scale. A breakdown of the aforementioned pattern results in wider ticks and heavy volume.
Declining 20-period Exponential Moving Average (EMA) at 139.43 adds to the downside filters.
The Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates that downside momentum has been triggered.
A confident break below June 06 low at 139.09 will drag the asset toward March 08 high at 137.92 followed by March 02 high at 137.10
On the flip side, a break above May 31 high at 140.42 will drive the asset toward May 30 high at 140.93. A break above the latter will expose the asset to a fresh six-month high of around 141.61, which is 23 November 2022 high.
USD/JPY hourly chart