USD/JPY Price Analysis: Remains below the 200-DMA, albeit reclaiming 134.00

• USD/JPY is back above 134.00, eyeing a challenge of the 200-day EMA.
• The major is consolidated around 130.50/134.40 after dropping below the 200-day EMA.
• USD/JPY Price Analysis: Minor divergence between price action and the RoC suggests a fall below 134.00.

The USD/JPY has advanced steadily since the December 20 500-pip fall after the Bank of Japan (BoJ) removed the cap of 0.25% to the 10-year Japanese Government Bond (JGB), catching traders off guard. Therefore, the Japanese Yen (JPY) strengthened, though it has erased some of its gains. At the time of writing, the USD/JPY is trading at 134.17, up by 0.54%.

USD/JPY Price Analysis: Technical outlook

The USD/JPY daily chart shows the pair edged below the 200-day Exponential Moving Average (EMA), opening the door for further losses. Since then, the USD/JPY consolidated at around the 130.50/134.40 range, due to light liquidity conditions, amidst the last trading week of 2022. The Relative Strength Index (RSI) is in bearish territory, while the Rate of Chance (RoC) suggests that sellers are gathering momentum, even though the USD/JPY reached higher highs. Therefore, a minor divergence between price action and the RoC could pave the way for further losses in the USD/JPY.

If the USD/JPY fails to clear the 200-day EMA at 135.00, the next support would be the 134.00 mark. Break below will expose the December 27 daily low of 132.63, followed by the August 11 swing low of 131.73.

An alternate scenario, if the USD/JPY clears the 200-day EMA, that could pave the way towards November 15 swing low-turned-resistance at 137.65, though it would face some resistance on its way north, like the 136.00 figure.

USD/JPY Key Technical Levels