USD/JPY Price Analysis: Bears gather momentum on BoJ’s news, threatening to crack the 20-DMA

• The USD/JPY 1-hour chart falling wedge was invalidated by a price violation on BoJ’s Ueda news.
• USD/JPY Price Analysis: Long-term is still downward biased unless it breaks resistance around 133.00.

USD/JPY remains pressured by rumors that Kazuo Ueda will be appointed as the new Bank of Japan (BoJ) Governor, sending the USD/JPY diving to its weekly low of 129.79. Nevertheless, the USD/JPY recovered some ground, exchanging hands at around 130.90, slightly above the 20-day Exponential Moving Average (EMA).

From a daily chart perspective, the USD/JPY remains downward biased, but buyers reclaiming the 20-day EMA at 130.72 could put into play the psychological 131.00 level. The Relative Strength Index (RSI) suggests that a bearish continuation is likely, while the Rate of Change (RoC) shifted neutral.

Intraday, the USD/JPY one-hour chart portrays the pair as downward biased. On Thursday’s analysis, I wrote, “the formation of a falling wedge, suggesting a bullish continuation, which could lift prices towards 131.60 and the January 11 high at 132.87,” and added mixed signals between the RSI and the RoC, suggesting that caution is warranted. Hence, BoJ’s news invalidated the chart pattern and opened the door for further losses.

For USD/JPY to resume its upward bias, it must clear the day’s high at 131.87, followed by the weekly high at 132.90. On the other hand, and in the most probable scenario, the USD/JPY could retest the week’s low. Therefore, the USD/JPY first support would be the S1 daily pivot at 130.64. A breach of the latter will expose the psychological 130.000 level, followed by the lows of the week/session at 129.79.

USD/JPY One-hour chart

USD/JPY key technical levels