USD/JPY Price Analysis: Stumbles below 138.00 on RSI negative divergence

• USD/JPY drops during the day but remains range-bound until sellers break below 137.70.
• The BoJ decided to hold rates unchanged, and the YCC control in the 10-year at 0.25%.
• USD/JPY Price Analysis: Negative divergence in the daily chart opens the door for further losses.

The USD/JPY falls below the 138.00 threshold following the Bank of Japan’s decision to hold rates unchanged while pledging to its dovish monetary policy stance and keeping the Yield Curve Control (YCC) in the 10-year JGB bond yield at 0.25%. At the time of writing, the USD/JPY is trading at 137.98, down by a minimal 0.18%.

USD/JPY Price Analysis: Technical outlook

USD/JPY Daily chart

The USD/JPY uptrend is still intact, but it appears to be losing steam. Albeit reaching higher highs, the Relative Strength Index (RSI) is still diverging from price action. Indeed, two days ago, the RSI slid below the RSI’s 7-day SMA, meaning that sellers began to overcome buyers. Additionally, the break of the rising wedge to the downside opened the door for a fall to 133.50, but the pair is consolidating around  137.70s-138.80s.

Therefore, the USD/JPY’s first support will be the July 19 low at 137.38. Break below will expose the 20-day EMA at 136.75, followed by the MTD low at 134.74.

USD/JPY 1-hour chart

In the near term, the USD/JPY 1-hour chart illustrates the pair sliding below all the hourly EMAs but bracing for the 200-hour EMA, just below it, around 137.88. USD/JPY traders should notice that the exchange rate is also below the July 20 low lying at 137.95, further opening the door for a test of the weekly lows at 137.38.

However, on its way south, USDJPY’s sellers would have some hurdles to overcome. The USD/JPY first support will be the S2 daily pivot at 137.69. A breach of the latter will send the major towards the week’s low at 137.38, followed by the figure at 137.00.

USD/JPY Key Technical Levels