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Is the US dollar/JPY downward channel bottoming out? MACD may face an oversold rebound after a dead cross
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: The US dollar/Japanese yen decline channel has bottomed out and turned around? After the MACD dies, it may face an oversold rebound market." Hope it will be helpful to you! The original content is as follows:
On Thursday (April 10), the US dollar-JPY exchange rate continued its recent weak trend, with trading around 145.500 before the market. The yen bulls maintain a strong momentum, but it seems to lack follow-up action energy, which is mainly constrained by the improvement of global risk sentiment, which poses certain resistance to traditional safe-haven assets.
State analysis
The factors that tend to be bullish on the yen in the near future are still obvious. The market expects the Bank of Japan to raise interest rates further, and the strong producer price index (PPI) data released earlier today further strengthened this expectation. The Bank of Japan's preliminary report showed that the Japanese producer price index rose 0.4% month-on-month and 4.2% year-on-year in March, both higher than market expectations, which may push up consumer prices and in turn support the Bank of Japan to further tighten its policies.
At the same time, the hawkish Bank of Japan expects to have a clear disagreement with the prospect of the Fed's multiple interest rate cuts, which keeps the dollar bulls defensive.
U.S. President Trump agreed to meet with Japanese officials to start trade discussions after a call with Japanese Prime Minister Shigeru Ishiba earlier this week. U.S. Treasury Secretary Scott Besent later said that Japan might have become a priority in tariff negotiations, which has sparked hopes of a possible trade agreement between the United States and Japan and another factor supporting the yen.
Minutes of the Federal Reserve meeting from March 18 to 19 show that officials almost unanimously agree that Trump's trade tariffs may cause the U.S. economy to face inflationRisks of rising and slowing growth. However, policymakers have called for a prudent approach to rate cuts, which has forced markets to cut expectations for more aggressive easing in the Federal Reserve.
At present, traders expect the Fed to wait until June to start a new cycle of interest rate cuts, and expect to cut interest rates by only 75 basis points by the end of the year. However, the dollar bulls seem cautious.
Technical analysts interpreted:
From the 4-hour chart, the US dollar-JPY exchange rate has formed a significant decline channel, and the price operates in an orderly manner within the channel. Recently, the exchange rate has gained support around 144.900 and rebounded from a low of 143.992. Currently, the price is trying to return to the 146.600 level, but faces multiple resistances. First, there is the suppression of the downward trend line, followed by the 14-period moving average (MA14) at 146.052 to form dynamic resistance. MA55 and MA200 are located at 147.653 and 148.745, respectively, further limiting the upward space.
The MACD indicator shows that the DIFF value is -0.373 and the DEA value is -0.450. The two lines are in a dead cross state, but the MACD bar chart shows signs of shortening, indicating that the short power may be weakening. The RSI indicator reads at 43.740, which is in a neutral and weak area and has not yet reached a severe oversold level. The CCI index value is -33.477, which also indicates that the market is in a neutral and weak state, but is close to the edge of the oversold area.
Analysis from the daily chart, since the US dollar against the Japanese yen has formed a significant downward trend since its high of 158.871. The exchange rate fell below many important moving averages, including MA14, MA55 and MA200, indicating that the medium-term downward pressure is still relatively large. At present, the price has been supported in the 144.450-143.992 area, forming a potential double-bottom pattern.
The DIFF value of the daily MACD indicator is -0.918 and the DEA value is -0.649, which is in a significant short position. The daily RSI is 37.542, close to the oversold area, but no clear reversal signal has been given yet. The daily CCI value is -94.018, which is close to the oversold area, which is usually a signal that the market may experience a technical rebound.
Future Outlook
Short-term Outlook: The US dollar against the Japanese yen is currently on the verge of a technical rebound. If it can break through the 146.600 level (the previous support resistance), it may further explore the two important resistance levels of 148.277 and 148.300. The two support levels below 144.900 and 144.450 will be the key for bulls to maintain rebound momentum.
Medium- and long-term outlook: From the technical structure, the US dollar is still in a clear downward trend, and the MA55 moving average continues to tilt downward, suggesting that the downward pressure continues to exist. However, as prices approach important support areas and technical indicators show oversold, the possibility of a phased rebound cannot be ruled out. From the analysis of the volatility cycle, the exchange rate may end its short-term decline cycle and enter a stage of consolidation or rebound. RuojiThe monetary policy differences between the central bank and the Federal Reserve continue to expand, the yen is expected to remain strong, and the US dollar still faces downward risks against the yen in the medium term. Key support levels are at 143.992 and 143.500 levels, while 151.207 and 151.741 above will be the key resistance encountered in the rebound.
The above content is all about "[XM Foreign Exchange Platform]: The US dollar/JPY decline channel has bottomed out and turned around? After the MACD crosses, it may face an oversold rebound market". It is carefully xm-links.compiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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