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USD/JPY Turns Red, Why It Could Decline Below 130

Key Highlights

  • USD/JPY started a fresh decline below the 135.00 support zone.
  • A connecting bearish trend line is forming with resistance near 134.20 on the 4-hours chart.
  • GBP/USD is eyeing more gains above the 1.2300 resistance zone.
  • The UK GDP could contract 0.2% in Q2 2022 (QoQ) (Prelim).


USD/JPY Technical Analysis

The US Dollar started a major decline from well above the 138.00 level against the Japanese Yen. USD/JPY declined below the 135.00 support to move into a bearish zone.

Looking at the 4-hours chart, the pair declined below the 132.00 level before it found support near the 130.40 level. This past week, there was an upside correction above the 132.00 level.

The pair climbed above the 134.00 level, but it stayed below the100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours). There is also a connecting bearish trend line forming with resistance near 134.20 on the same chart.

On the downside, the first major support is near the 131.75 level. The main support is now forming near the 130.50 level. A downside break below the 130.50 support might spark more losses.

The next major support is near the 130.00 level. Any more losses might send the pair towards the 128.00 zone. On the upside, the pair is facing resistance near the 133.75 level. The next major resistance is near the 134.40 level and the trend line.

A clear move above the trend line resistance might send the pair higher towards the 136.00 level. The next major resistance is 136.80, above which the pair could accelerate higher. In the stated case, the pair could rise towards the 138.00 resistance zone in the near term.

Looking at GBP/USD, the pair remained well bid above the 1.2100 level and seems to be aiming a decent increase above the 1.2300 resistance zone.

Economic Releases

  • UK GDP for Q2 2022 (QoQ) (Prelim) - Forecast -0.2%, versus +0.8% previous.