USD/JPY price slips amid safe-haven flows
Yen weakens against USD as support breaks at 153.90; bearish momentum looms
The yen has reversed gains against the dollar index on safe-haven flows. As a result, USD/JPY price movement struggled to gain traction on Wednesday, hitting resistance at the 156.00 mark before selling pressure intensified into Thursday's trading sessions.
The pair dropped below the 0.5 mid point of the Fibonacci plotted between the most recent price swing on the daily timeframe. This suggests a bearish shift in sentiment.
The Relative Strength Index (RSI) for USD/JPY has also fallen below the 50% threshold, a level often seen as a sign of bearish momentum. Prices are now approaching key support at 153.90. A break below this level could pave the way for a deeper decline toward the 10-day low at 151.700 support.
Policy divergence shapes USD/JPY bearish outlook
Bank of Japan (BoJ) Governor Kazuo Ueda’s recent remarks have heightened speculation over potential policy changes. While Ueda refrained from making specific policy commitments, his comment about evaluating decisions on a meeting-by-meeting basis left the door open for a possible 25-basis-point rate hike in December. Investors are now pricing in an equal chance of a hike or an on-hold decision, keeping the market on edge.
While the Yen finds support from safe-haven flows and BoJ policy uncertainty, the USD remains buoyed by higher bond yields and strong inflation expectations. The market is now closely watching the 153.90 support level. A breach could accelerate the pair's downward trajectory, potentially testing the 151.70 level. On the upside, 156.00 remains the key resistance limiting recovery.
Although the technical outlook leans bearish, a combination of policy divergence, upcoming central bank meetings and safe-haven demand will shape the USD/JPY’s near-term direction.
USD/JPY has dropped below the critical 153.90 support level, aligning with the 0.786 Fibonacci retracement. A 50 and 100 EMA intraday crossover adds to the pair's bearish momentum.
