USD/JPY Price Analysis: Hovers around 133.80s as a negative divergence emerges

• The USD/JPY is erasing its previous weekly gains and is losing 0.40%.
• A hawkish Fed hiked 75 bps in a dovish way.
• USD/JPY Price Forecast: Headed for a pullback before resuming the overall uptrend.

USD/JPY slides for the first time in the week, following a hawkish rate by the Fed, though smoothed it later by Fed’s Chairman Jerome Powell, who said that moves of that size, he does not expect them to be “common,” in response to that, the USD/JPY plunged close to 80 pips in just 10 minutes, giving way for a break below 134.00. At the time of writing, the USD/JPY is trading at 133.82, barely up 0.02% as the Asian session begins.

US equities finished Wednesday’s session with gains, reflecting a relief rally, while Asian stocks prepare for a higher open. The greenback remains on the defensive, as illustrated by the US Dollar Index (DXY) down 0.57%, trading at 104.874. US Treasury yields edged lower but stayed above the 3% threshold.

USD/JPY Price Forecast: Technical outlook

Daily chart

The USD/JPY daily chart depicts the pair as upward biased. Nevertheless, the last couple of cycle highs were recorded as the Relative Strenght Index (RSI) registered two peaks, but the second peak was lower than the previous one, meaning a negative divergence formed. That said, the USD/JPY might be headed for a pullback, targeting the May 9 daily high-turned-support at 131.34.

4-hour chart

The USD/JPY 4-hour chart illustrates the pair as upward biased. However, the negative divergence between price action and the RSI mentioned in the paragraph above is further reinforced in the present time frame. With that said, the USD/JPY first support would be the 50-simple moving average (SMA) in the 4-hour chart at 133.62. A breach of the latter would expose the S1 daily pivot at 133.00, followed by the S2 pivot point at 132.21.

Key Technical Levels