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USD/JPY at Risk of Further Losses

May 27, 2022

  • USD/JPY started to decline after breaking below support at 128.80.
  • Bearish trend line has formed resistance near 127.65.

The US Dollar, Japanese Yen pair started a fresh decline from well above 130.50. USD/JPY declined rapidly after breaking below the 130.00 and 128.80 support levels.

USD/JPY 4-Hour Chart (Trend: BEARISH)

On the 4-hour chart, the USD/JPY pair gained momentum after breaking below the 128.00 level, and both the 100-MA (red) and 200-MA (blue). The quote even dropped as low as 126.35, before correcting higher towards 127.50. It currently trades just below the 127.00 level.

For the pair to turn bullish, the quote will first need to test resistance near 127.50. This is also close to a key bearish trend line and the 38.2% Fibonacci retracement level of the downward move from the swing high of 129.78 to the swing low of 126.35. Above this there is further resistance near 128.00 and the 50% Fibonacci retracement level (of the 129.78 high to the 126.35 low). Further gains could see the quote climb back up towards the 128.80 level, and potentially as high as 130.00.

In contrast, if the pair continues bearish, the quote will first need to test support near the 126.50 level. Below this there is further support near 125.00. Further losses could see the quote drop down as far as the 124.00 level.

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