USD/JPY Price Analysis: Trapped around 129.50-130.00 on risk-off ahead of US NFP

• The USD/JPY retreats from weekly highs above 130.00 and falls below the 20-hour SMA, eyeing 129.50.
• Risk appetite has improved but remains fragile and could shift at any time.
• USD/JPY Price Forecast: Range-bound but slightly tilted to the downside in the 1-hour chart.

The USD/JPY retraces from three-weekly highs, and bears drag prices down the 130.00 mark, eyeing to push the pair towards the 20-day moving average (DMA) around 128.66, amidst a risk-off session on Thursday. At the time of writing, the USD/JPY is trading at 129.79, posting decent losses of 0.23%.

Besides US Dollar weakness boosting the yen, unchanged US Treasury yields add their part to the USD/JPY drop. The 10-year benchmark note rate sits at 2.919%, flat in the session.

Sentiment has improved in the North American session, as US equities record gains. The US Dollar Index, as above-mentioned, is pairing Wednesday’s losses, down 0.64%, sitting at 101.894. Mixed US economic data weighed some on the mood, but the markets lack a clear direction ahead of Friday’s Nonfarm Payrolls report.

Elsewhere, the USD/JPY retraced from weekly highs at 130.24, but the drop was capped near the 50-hour simple moving average (SMA) at 129.54, then climbed towards the 20-hour SMA at 129.92, settling down near 129.75.

USD/JPY Price Forecast: Technical outlook

From a daily chart perspective, the USD/JPY, although in an uptrend, is consolidating in the high 129.00s. The Relative Strength Index (RSI) is in bullish territory but aims lower, so buying pressure is easing.

The USD/JPY hourly chart depicts the major is trapped within the 20 and 50-hour SMAs. Furthermore, the RSI shifted gears, below the 50-midline, with a downward slope, as the USD/JPY is edging towards the daily pivot at 129.62. Nevertheless, the USD/JPY needs to break below the current daily low at 129.51 to pave the way for further downside action.

If that scenario plays out, the USD/JPY first resistance would be the S1 daily pivot at 129.05, which once cleared would expose the May 31 high at 128.89. A breach of the latter would expose the 100-hour SMA at 128.55.

Key Technical Levels