The USDJPY pair quickly reversed an early Asian session dip to the 112.35 region and jumped to over one-week tops in the last hour. Where is the pair headed next? Gain insight into today's technical outlook.
22 October, GKFX – The pair regained traction at the start of a new trading week, marking the fourth session on a positive move in the previous five, and was being supported by a continuous improvement in investors' risk appetite.
Moody’s downgrade of Italy’s credit rating to Baa3, a notch above junk status, and a stable outlook was well received by the market and was evident from the prevalent positive tone around equity markets.
The risk-on mood weighed on the Japanese Yen's safe-haven status and turned out to be one of the key factors driving the pair higher, with bullish traders largely ignoring a modest retracement in the US Treasury bond yields and a subdued US Dollar price-action.
It would now be interesting to see if the pair is able to build on the positive momentum amid absent relevant market moving economic releases. Moving ahead, this week's important US macro data, with the key focus on Friday's advance Q3 GDP growth figures, will now be looked upon for some fresh directional impetus.
USDJPY Technical Outlook
Omkar Godbole, Analyst and Editor at FXStreet writes:
“The relative strength index (RSI) has turned bearish and the MACD has generated a bear cross. The pair's repeated failure to beat the 100-period EMA on the 4-hour chart has likely emboldened the bears.”
“As a result, the spot looks set to test demand around 112.00-111.91 (rising trendline support),”
he added further.
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