Usdjpy Test Lows

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Usdjpy Test Lows

Usd/Jpy Test Lows, Bullish Trend At Risk

USD/JPY is once again testing the support near the level at which it formed a bottom in August. It is important to note that USD/JPY made a pullback from these levels but has once again returned to test them again.

This is a sign that the technical outlook of USD/JPY has turned in favor of the bears for now. If we look at the bigger picture, the recent price action of USD/JPY directly relates to the strength of the Japanese Yen.

Bank Of Japan Maintains A Hawkish Stance

On the fundamental front, we are now only days away from the rate cut by the Federal Reserve. At the same time, the BoJ has maintained a hawkish stance. This situation has made it easy for the USD/JPY to trend lower and test its lows once again.

The bottom line is that the uptrend in USD/JPY is at risk, and we are now looking at a reversal and the start of a new bearish trend.

According to experts, a break of 141.69, which is the low from 5th August, is needed to validate a trend change. However, merely closing below that level will not be enough, as a candle close on the D1 or W1 timeframe will be required.

On the way down, the first strong support is seen near 140.25, followed by the next one at 140.00. A break of this level can't be taken out of the equation and would be a sign of strong JPY demand.

For now, the trend favors the JPY against the USD, which means the path of least resistance is a downside. Even the fundamental front supports this as the Federal Reserve is entering its rate-cutting cycle. To make things more complicated, the upcoming US elections are also weighing heavily on the US Dollar and benefiting the Japanese Yen.

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