The US dollar has fallen lower against the Japanese yen currency after the release of commentary from Fed members on Monday and the soft NFP print, which could point to more losses ahead for the USDJPY pair.
It seems that traders might also prefer to sell USDJPY ahead of the release of the latest US consumer inflation figures on Wednesday, which will play a key role in influencing the Fed’s near-term.
The US Dollar is basically languishing near its lowest level since June 22 in the wake of speculations that the Federal Reserve will soften its hawkish stance sooner rather than later and turns out to be a key factor acting as a headwind for the USD/JPY pair.
In fact, two Fed officials said Monday that the end to the current monetary policy tightening cycle is getting close, which led to the overnight decline in the US Treasury bond yields and keeps the USD bulls on the defensive.
The key thing to watch this week is that the trend remains short-term bullish while the price trades above the 140.00 level. However, a move under 142000 could set up a test of the 138.00.
According to the ActivTrader Market Sentiment tool some 58% of traders are bullish towards the USDJPY pair and the other 42% are bearish, which strongly hints that we could see more downside.
With retail traders or participants are quite bullish thus the chances of a price correction to 140.00 or even to 138.00 are dramatically increased.
USDJPY Short-Term Technical Analysis
Technical analysis on the four-hour time frame shows that the USDJPY pair continues to crash under the Ichimoku Cloud and is now short-term bearish below its lagging and base line.
According to Ichimoku analysis, continued weakness under the bottom of the cloud and we should be seeing extremely bearish price action for the USDJPY pair towards 140.00.
USDJPY Medium-Term Technical Analysis
The daily time frame is showing that the USDJPY pair is still trading above Ichimoku cloud support and is quickly crashing towards this cloud right now.
According to Ichimoku analysis the price is working its way towards the cloud around the 140.00 level. Better to wait for a trend change or continuation is we test and hold the 140.00 level.
If the price holds I would expect 145.00, and if not then we should see a drop towards the 138.00 price level.