The USD/JPY pair experienced a reversal, declining by over 0.54% on Tuesday. This movement comes as investors gained confidence in the likelihood of a Federal Reserve rate cut during the December meeting, prompted by a soft US inflation report and weaker-than-anticipated Retail Sales data. As of the current analysis, the pair is trading at 155.98, dipping below the 156.00 mark for the first time in four days.
The USD/JPY has decreased by 0.54% as weaker US economic data enhances expectations for a rate cut by the Federal Reserve in December. The pair is currently testing a significant support level, while the overall upward trend continues to hold, characterized by higher highs and higher lows. A breach beneath support suggests potential declines toward the 155.00–154.00 range, whereas a recovery above 156.00 paves the way for upward resistance levels.
The USD/JPY exhibits an upward bias; however, at the time of writing, it is testing the previous resistance that has now become support, specifically the February 10 high at 155.88. Nevertheless, the pair continues to establish a sequence of higher highs and higher lows, indicating that the bulls are in control. Additionally, the Relative Strength Index, while edging lower, continues to reside in positive territory.
In the short-term, should USD/JPY fall beneath 155.50, it paves the way to challenge the 155.00 level, subsequently approaching the 154.00 mark and the daily low from November 14 at 153.62. If exceeded, the subsequent target would be the 50-day SMA at 152.02. Conversely, should USD/JPY surpass 156.00, the subsequent resistance level will be the high from November at 157.89, followed by the yearly peak of 158.88.