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USD/JPY: looks like a day of consolidation on key support area

  • USD/JPY bulls are diminishing by the day.
  • USD/JPY's move a little more justified while stocks closed mixed.

After a hefty sell-off in North America from 112.17 down to 111.14, currently, USD/JPY is trading at 111.20 in the Tokyo open, down 0.00% on the day, having posted a daily high at 111.33 and low at 111.15. Indeed, it seems its going to be a day of consolidation ahead of the Thanksgiving holidays.

  • FOMC minutes: Participants felt an interest rate increase was warranted in near-term.
  • Wall Street closes mixed as Thanksgiving break kicks off.

USD/JPY bulls are diminishing by the day and the price is now sitting in a critical support area the 200-D SMA is located. The DXY was beaten down on the dovish FOMC minutes, extending the drift lower from 93.94 in Asia and in London from 93.74. 93.90 were the recovery tops for the NY shift early. US rates were also lower and US data disappointed with a big miss in US Durable Goods data. The University of Michigan survey was also a weight considering it fell in line with the ongoing caution around the inflation outlook.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that technically, the pair presents now a strong bearish potential, as in the daily chart, the price is converging with its 100 and 200 SMAs, both flat, as technical indicators resumed their declines within the negative territory, currently at fresh 2-month lows. "Shorter term, and according to the 4 hours chart, the risk is also lean toward the downside, as the pair is further below its 100 and 200 SMAs, while the Momentum indicator maintains its sharp bearish slope below its 100 level, and the RSI indicator consolidates around 27. The pair has an unfilled weekly opening gap from mid-September, at 110.82, a nice short-term target in the case of further declines," Valeria argued.

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