- The Japanese yen weakened to its lowest level in the year, as shown by USD/JPY rising to 125.77.
- US Treasury yields continue to advance on the session as market players brace for aggressive Fed tightening.
- USD/JPY Price Forecast: Negative Divergence Between Price Action and Oscillators Could Open the Door for a Downside.
On Monday, the USD/JPY it posted a new year-to-date high at 125.77, albeit down from the 125.85 high of June 2015, and extended its gains for the seventh consecutive day to 1.04% in the American session. USD/JPY is trading at 125.51 at press time.
Rising US Treasury Yields Weigh on JPY
A risk-off market mood has increased the appetite for safe-haven assets. In the case of USD/JPY, rising US Treasury yields keep the Japanese yen under pressure amid the Bank of Japan’s pledge to take an accommodative stance on its inflation targeting goal. Of 2 %.
The 10-year US Treasury yield is gaining six basis points to 2,784%, supporting the dollar. The US Dollar Index, which measures the value of the dollar against a basket of six rivals, is up 0.04% at 100.025.
Overnight USD/JPY opened around 124.00 and rose over 100 pips, breaking the 125.00 level, followed by the break of the previous yearly high at 125.10.
USD/JPY Price Forecast: Technical Outlook
The USD/JPY rally posted a new cycle high, but traders should keep an eye on the RSI. RSI remains in overbought conditions, but USD/JPY’s jump towards 125.77 failed to push RSI above 87.29, a level reached at the previous 2022 high at 125.10, signifying negative divergence between price action and the oscillators would open the door for losses.
If that scenario plays out, USD/JPY’s first support would be the March 28 cycle high at 125.10. A decisive break would expose the daily high of April 5 at 123.67, followed by the daily high of March 24 at 122.41.
If the pairs continue higher, the first resistance would be the June 2015 cycle high at 125.86. Once cleared, the next resistance would be 126.00, followed by the April 2001 high at 126.85.
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
