USD/JPY Collapsing Towards a Fresh Three-Month Low

USD/JPY Price and Chart Analysis

• USD/JPY still dancing to the dollar beat.
• USD/JPY boxed in and looking at a break of support.

USD/JPY Weakness Leaves 140.00 as the Next Downside Objective

Several members of the Federal Reserve are worried that the recent series of interest rate hikes may have a negative impact on the US economy, the latest FOMC minutes revealed on Wednesday. The minutes noted that slowing the pace of increases ‘could reduce the risk of instability in the financial system’, while others noted that the balance of risks to the US economy, are ‘now skewed to the downside’. This slight dovish shift, coupled with recent Fed speak calling for a more restrained approach to rate hikes, has seen the greenback tumble further after months of uninterrupted gains.

FOMC Minutes – November 1-2, 2022

USD/JPY remains in a short-term consolidation zone but the technical outlook is looking more negative. The recent 137.70-142.60 range remains intact but with the spot price currently at 138.38, support looks set to be re-tested. A clean break would open the way to the 200-day moving average which currently sits at 133.84. USD/JPY last traded below the 200-dma back in February 2021. Below the 200-dma, big figure support at 130 comes into play. If the US dollar gets a pick-up – there are a few important US data releases and events next week – then 142.60 comes into play. Unless data or events give the Fed reason to turn hawkish, this level should prove difficult to break.

Bank of Japan (BoJ) – Foreign Exchange Market Intervention

For all market-moving economic data and events, see the DailyFX Economic Calendar.

USD/JPY Daily Price Chart – November 24, 2022

Chart via TradingView

Retail Traders Undecided on USD/JPY

Retail trader data show 45.30% of traders are net-long with the ratio of traders short to long at 1.21 to 1.The number of traders net-long is 3.24% higher than yesterday and 3.24% lower from last week, while the number of traders net-short is 1.33% lower than yesterday and 3.43% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USD/JPY trading bias.

What is your view on the USD/JPY – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.