- USD/JPY is bullish, but a falling wedge indicates a move lower is ahead.
- Despite broad US dollar strength, the US dollar failed to capitalize against the Japanese yen.
On Monday, during the American session, the USD/JPY fell 0.05%. At the time of writing this article, it trades at 115.13. Market sentiment is mixed, as shown by US stock indices fluctuating between winners and losers.
Meanwhile, the US Dollar Index, a gauge of the dollar’s value against a basket of its peers, rose 0.09% to 95.57. Meanwhile, the US 10-year yield is down 1.5 points from the previous earnings dip to 1,916%, a headwind for USD/JPY, which is strongly positively correlated with it.
USD/JPY Price Forecast: Technical Outlook
USD/JPY is biased to the upside from a technical perspective. The daily moving averages (DMAs) are below the spot price, which suggests the above. However, the possibility of another leg down before resuming towards the yearly highs and higher may be on the cards due to a falling wedge formation.
It looks like a double top will form in the short term but would need a daily close below the neckline at 114.14 to confirm its validity. In that case, the first support would be the 100 DMA at 113.76. A breach of the latter would target the lower trend line of a falling wedge around 113.40.
In that outcome, a move towards 114.00 would open the door for further gains. Next resistance would be the daily low of Feb 2, support turned resistance at 114.14, followed by the 50 DMA at 114.48, followed by the falling trend line from the falling wedge around 115.30.
Technical levels
Source: Fx Street
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