USD/JPY Price Analysis: Looks set for further downside below 131.50

• USD/JPY is likely to drag further amid the strengthening appeal for the Japanese Yen.
• It seems that forward anxiety ahead of the Fed’s monetary policy is missing from the market.
• Declining 10-EMA at 132.35 indicates that the downside momentum is extremely strong.

The USD/JPY pair has corrected sharply below 132.00 in the Asian session. The appeal for the Japanese Yen as a safe-haven has improved amid potential fears of global banking turmoil led by rising interest rates by western central banks.

S&P500 futures have turned negative after surrendering significant gains generated in the early morning session, portraying extremely negative market sentiment, despite UBS rescuing Credit Suisse. Bloomberg reported Finma Chief Urban Angehrn says US regulators support the UBS deal to buy Credit Suisse for $3.3 billion.

The US Dollar Index (DXY) is struggling to sustain above the 103.80 resistance. It seems that forward anxiety ahead of the Federal Reserve’s (Fed) monetary policy is missing from the market.

USD/JPY is declining toward the 61.8% Fibonacci retracement (placed from January 16 low at 127.22 to March 08 high at 137.91) at 131.30 on a four-hour scale.

The declining 10-period Exponential Moving Average (EMA) at 132.35 indicates that the downside momentum is extremely strong.

Adding to that, the Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which promises weakness further.

It seems that the downside pressure would continue if the asset will surrender last week’s low at 131.55. An occurrence of the same would drag the asset toward January 23 high around 130.89 followed by February 10 low at 129.80.

In an alternate scenario, a break above the 38.2% Fibo retracement at 133.83 would strengthen the US Dollar bulls. This might drive the asset toward March 15 high at 135.11 and February 28 low at 135.73.

USD/JPY four-hour chart