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  • The USD/JPY is trading with a bearish bias at the 109.619 level amid weaker US inflation figures from the Bureau of Labor Statistics.
  • The USD/JPY price forecast remains bearish as it has violated the upward trendline support level of 109.700. 
  • Forex trading participants are likely to go for sell trades below the 110.050 level today.

During the US trading session, the safe-haven currency pair USD/JPY  is trading with a bearish bias at the 109.630 level. The USD/JPY currency pair failed to extend its previous-session bullish bias and dropped sharply near the 110.00 level as the selling pressure surrounding the USD seems to be the primary driver of USD/JPY weakness. The USD/JPY price forecast remains bearish as it has violated the upward trendline support level of 109.700.

If you are interested in trading USD/JPY with forex robots, check out our guide.

Risk-on Sentiment in Play

The US dollar is trading bearish amid the market’s risk-on mood, which tends to undermine safe-haven assets like the dollar. Furthermore, the greenback lost some additional ground after the release of softer-than-expected US consumer inflation figures. 

Alternatively, the prevalent risk-on market mood undermined demand for the safe-haven JPY. This was seen as one of the key factors that kept the lid on any additional losses in the USD/JPY currency pair. The safe-haven USD/JPY pair is trading at 109.81 and consolidating in the range between 109.76 and 110.15.

Worse than expected US Inflation figure weakens dollar

The Bureau of Labor Statistics reported a worse than expected consumer price index from the US. The USD’s latest selling pressure seems to be the main driver of the USD/JPY currency pair’s bearish bias. The latest figures from the US Bureau of Labor Statistics reported that the annual Core Consumer Price Index (CPI) decreased to 4% in August from July, as the US Dollar Index (DXY) turned south. 

As of writing, the DXY was down 0.3% at 92.33. In the meantime, the benchmark 10-year US Treasury bond yield, which grew as much as 1% earlier in the day, is now losing 0.7%, putting additional pressure on the USD/JPY currency pair.

On the other hand, the currency pair received some support from the market risk-on environment. It’s being represented by a positive tone in the equity markets by undermining the safe-haven JPY. The market’s trading sentiment maintained its overnight positive moves during Tuesday. Thus, it remained well bid as the optimism over the faster vaccinations helped the market stay bid. Meanwhile, the easing of tensions over Iran’s issue positively impacted the market’s trading sentiment.

Investors are still speculating that the Fed will ultimately start rolling back its massive pandemic-era stimulus later this year. This is due to a positive intraday move in US Treasury bond yields, which acted as a tailwind for the US dollar and limited any meaningful gains for the USD/JPY currency pair.

USD/JPY Price Forecast
USD/JPY 4-Hour Timeframe

USD/JPY Price Forecast – Technical Levels

Daily Support and Resistance

S3 109.49

S2 109.69

S1 109.8

Pivot Point 109.9

R1 110.01

R2 110.1

R3 110.31

USD/JPY Price Forecast – Upward Trendline Set to Breakout at 109.700

The USD/JPY currency pair is trading with a strong bearish bias at the 109.637 level. The USD/JPY is likely to find immediate support at the 109.408 level on the bearish side. Furthermore, the breakout of the 109.408 level is expected to expose USD/JPY prices towards the next support level of 109.195.

On the 4 hour timeframe, the pair has formed a bearish engulfing candle which suggests robust selling bias in the USD/JPY pair. Alongside, the 50 Peters exponential moving average provides a strong resistance at the 110.050 level.

Currently, the pair is trading at the 109.617 level, which is also working as a triple bottom level for the currency pair. However, the breakout of the 19.617 level can expose a strong selling bias until 109.408 and 109.120. On the bullish side, the Japanese yen may find strong resistance at the 110.050 level. A bullish breakout of this particular level can extend another round of buying until the 110.170 level.

Additionally, the Japanese yen may find strong resistance at the 110.461 level upon the breakout of the 110.177 level. Finally, leading technical indicators such as the stochastic RSI are indicating a sell.  Therefore, Forex trading participants are likely to go for sell trades below the 110.050 level today. All the best!

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