November 07,2022 08:57 AM ET
By:AnalysisWatch
USD/JPY struggles to capitalize on its modest intraday gains to the 147.55 area and turns lower for the second consecutive day on Monday.
The bearish trajectory drags spot prices below fundamental support near the 200-period SMA on the 4-hour chart, and bears are now waiting for a break below the 146.00 mark before placing new bets.
The US dollar adds to the sharp post-NFP losses and falls to one-week lows amid speculation that the Fed will slow the pace of its rate hike cycle. In addition, expectations that the Japanese authorities will once again intervene to smooth any sharp falls in the domestic currency put some downward pressure on the USDJPY pair.
However, risky momentum could limit significant gains in the safe-haven yen and help limit deeper losses. This, along with a large divergence in the monetary policy stance adopted by the Fed and the Bank of Japan, supports the prospects for the emergence of some buying around the USDJPY pair, warranting caution from bearish traders.
From a technical standpoint, the 146.00 round figure coincides with a one-and-a-half-week-old rising trendline support. A bit of follow-through weakness could trigger aggressive technical selling and make USD/JPY vulnerable. Subsequent downside could drag spot prices towards the late October low around the 145.00 psychological mark.
On the other hand, the 146.80 area seems to act as an immediate hurdle ahead of the 147.00 level. Any move higher could continue to encounter strong resistance near the daily high, around the 147.55 area. Sustained strength beyond the latter could allow USD/JPY to regain the 148.00 mark and test the 148.35–148.45 supply zone.
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