USDJPY Forecast: The Yen's Drop Approaches Dec 2023 Low

The ISM Services PMI today is set to boost or hold USDJPY’s drop
The US Dollar Index is retesting March 2024 lows
USDJPY Technical Analysis

Following a bearish streak of US economic indicators, from the leading ISM Manufacturing PMI to the non-farm payrolls, bearish dominance has been evident on the US Dollar index and USDJPY charts. Today's ISM Services PMI, which has dropped from a 9-month high to a 4-year low, is expected to introduce further volatility to the charts.

From a technical perspective, the extended momentum suggests a potential reversal is on the horizon. Additionally, the safe-haven demand driven by geopolitical tensions, particularly the escalating war potential in the Middle East, may also influence market dynamics in the near term.

Technical Outlook:

USDJPY Forecast: DXY – 3 Day Time Frame - Log Scale

Source: Tradingview

Retesting March 2024 lows, the US dollar index could face a potential support at the 102 border, which aligns with the trendline connecting the lows of July 2023 and December 2023. A further break to the 102 border could add further bearish pressures down towards the 101 zone.

A reversal from the 102 zone can retest the 103.80-104 zone and support a bullish reversal on the USDJPY chart.

USDJPY Forecast: USDJPY – Daily Timeframe – Log Scale

Source: Tradingview

The steep decline of the USDJPY pair is currently facing the significant December 2023 low at 140.25, which aligns with the 0.618 Fibonacci retracement of the 2024 uptrend. With momentum overstretched on the oversold side, the 140-price zone is acting as a potential support level for the ongoing 5-week drop.

Should the pair fall further below 140, additional support is anticipated around the 137 level.

Conversely, rebounds could see the pair retesting levels 146.40 and 148.60.

--- Written by Razan Hilal, CMT

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.