USD/JPY forms a bearish engulfing pattern, signaling potential further downside in the near term.
RSI momentum supports sellers, with first support eyed at Tenkan-Sen 145.33 and psychological 145.00 level.
Bulls must reclaim Kijun-Sen at 148.45, with 150.00 needed to reverse the bearish trend.
The USD/JPY dropped late in the North American session, registering losses of over 0.80% or more than 100 pips. It now trades at 145.68.
During the overnight session for US traders, headlines revealed that Bank of Japan (BoJ) Governor Kazuo Ueda reiterated his hawkish stance on remarks submitted to a government panel. This was the main driver of the pair, along with the plunge of the yield of the US 10-year Treasury note.
USD/JPY Price Forecast: Technical outlook
From a technical standpoint, the USD/JPY is downward biased, forming a ‘bearish engulfing’ chart pattern. This hints that more downside is seen, further confirmed by the Relative Strength Index (RSI), reassuring that momentum supports sellers.
With the path of least resistance tilted to the downside, USD/JPY's first support would be the Tenkan-Sen at 145.33. If hurdled, the next stop would be the 145.00 figure, ahead of testing the next cycle low of 143.45, the August 26 daily low. This would be the last line of defense for bulls, ahead of the August 5 low of 141.69.
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