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Why USD/JPY Could Extend Losses Below 127

Aayush Jindal

Aayush Jindal

Market Analysis

Key Highlights

  • USD/JPY started a downside correction from well above 130.00.
  • It broke a major bullish trend line with support near 129.40 on the 4-hours chart.
  • EUR/USD started an upside correction above 1.0550, and GBP/USD surpassed 1.2500.
  • Gold price recovered and climbed above the $1,825 resistance zone.

 

USD/JPY Technical Analysis

The US Dollar started a downside correction after a strong rally above 130.00. USD/JPY declined below the 129.50 support to move into a short-term bearish zone.

Looking at the 4-hours chart, the pair traded below the 129.20 support zone and the 100 simple moving average (red, 4-hours). There was also a break below a major bullish trend line with support near 129.40 on the same chart.

The pair even traded below the 76.4% Fib retracement level of the upward move from the 126.94 swing low to 131.34 high.

It even spiked below 127.20 and the 200 simple moving average (green, 4-hours). The next key support is near 126.80. A clear move below the 126.80 level could stage a strong decline in the near term.

If there is another increase, the pair might face resistance near the 128.50 level. The next major resistance is near the 129.20 level. A clear move above the 129.20 level might push the pair towards the key 130.00 resistance zone.

Looking at EUR/USD, the pair started a fresh increase and was able to clear the 1.0550 resistance. Similarly, GBP/USD was able to surpass the 1.2500 resistance.

Economic Releases

  • UK Retail Sales for April 2022 (YoY) - Forecast -7.2%, versus +0.9% previous.
  • UK Retail Sales for April 2022 (MoM) - Forecast -0.2%, versus -1.4% previous.
  • Euro Zone Consumer Confidence for May 2022 (Preliminary) – Forecast -21.5, versus -22 previous.