Technical Analysis: USD/JPY fails ahead of 145.00 mark on Tuesday, 23.6% Fibo. level holds the key for bulls

From a technical perspective, the post-BoJ rally falters near the 38.2% Fibonacci retracement level of the November-December downfall from the 152.00 neighbourhood. The said barrier is pegged near the 145.00 mark, which should now act as an immediate strong resistance and a key pivotal point. A sustained strength beyond will suggest that the USD/JPY pair has formed a near-term bottom and pave the way for some meaningful appreciating move. The subsequent move-up has the potential to lift spot prices to the next relevant hurdle near the mid-145.00s en route to the 146.00 round figure and the 50% Fibo. level, around the 146.40 region.

On the flip side, weakness below the 143.55-143.50 region, representing the 23.6% Fibo. level, could find some support near the 143.00 round figure. This is followed by a technically significant 200-day Simple Moving Average, currently pegged near the 142.65 zone, which if broken decisively will shift the bias back in favour of bearish traders. The USD/JPY pair might then turn vulnerable to weaken further below the 142.00 mark and accelerate the slide to the 141.75 horizontal support before aiming to retest sub-141.00 levels, or a multi-month low touched last week.


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The NZD/USD pair snaps its seven-day winning streak during the Asian session on Wednesday. However, the downside of the pair might be limited due to the ongoing US Dollar (USD) weakness and lower US Treasury bond yields. At press time, the pair is trading at 0.6261, losing 0.09% on the day.

Early Wednesday, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said that they were surprised by GDP data last week indicating the economy shrank but has no opinion yet on what it means for the interest rate outlook. He added that the New Zealand GDP data was surprisingly subdued while mentioning that there's still a long way to go as the inflation remains too high.

Furthermore, the People's Bank of China decided to leave the one-year and five-year Loan Prime Rate (LPR) unchanged on Wednesday at 3.45% and 4.20%, respectively.

On the USD’s front, The Federal Reserve (Fed) Chairman Jerome Powell said that it’s premature to declare victory over inflation or discuss the timing of rate cuts. However, he noted that the Core inflation rose just a 2.5% annual rate in the past six months and not far above the central bank's 2% inflation target. According to the CME FedWatch Tool, the market anticipates the Fed to keep its benchmark rate steady at its January meeting, but could start cutting rates as soon as March.

Moving on, market participants will monitor the US Existing Home Sales, due later on Wednesday. In the absence of top-tier economic data released from New Zealand’s docket this week, the NZD/USD pair remains at the mercy of the USD price.


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US Dollar softer with Red Sea tensions abating rapidly

The US Dollar (USD) is softer in the initial hours after the US opening bell on Tuesday. Markets are disregarding comments from European Central Bank (EC and Federal Reserve (Fed) speakers and rather focus on the easing of geopolitical tensions in the Red Sea. The US Dollar fades a touch with no safe haven inflow occuring after Monday's events, and seeing the US Dollar Index heading lower towards 102.

The GBPUSD pair broke 1.2720 level clearly and closed the daily candlestick below it, to turn to decline on the intraday basis and head towards potential visit to 1.2590 – 1.2560 areas.

Therefore, the bearish bias will be suggested for today conditioned by the price stability below 1.2720, noting that breaching this level will stop the expected negative scenario and lead the price to resume the main bullish trend within the bullish channel that appears on the chart.


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The EURUSD pair ended last Friday below 1.0960 level, to fall under expected negative pressure on the intraday basis, noting that our waited target is located at 1.0860.

The technical indicators provide positive signals that might push the price to attempt to recover and regain the bullish trend, which urges caution from the upcoming trading, noting that breaching 1.0960 will stop the current negative pressure and lead the price to achieve new gains that reach 1.1080, while breaking 1.0860 will push the price to achieve additional negative targets that extend to 1.0765.


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