Since May 9, the Japanese Yen began a downward trend and has been falling for 11 days. USD/JPY is currently trading below the 21 SMA and below the 5/8 Murray with a bearish bias in the short term.
A large divergence in monetary policy by the US central bank and the Bank of Japan offered additional support to the USD/JPY pair.
In the 4-hour chart, there is strong support at around the 200 EMA located at 127.40. If the yen trades below this level in the next few hours, it will be a clear signal to continue selling.
Last week, risk appetite triggered aggressive US dollar selling and contributed to strengthening the Japanese Yen reaching a low of 127.00.
In the short term, if the USD/JPY pair trades below the 21 SMA located at 129.16, there is a chance that any technical bounce will be seen as an opportunity to continue selling.
On the other hand, if the Japanese Yen trades below 128.16 in the next few hours, there will be a clear signal to sell due to the strong downward pressure that exists.
Since May 12, USD/JPY has been consolidating around 128.00 which has now become a strong resistance.
According to the daily chart, the Japanese yen is likely to continue its downtrend as long as it is trading below the trend channel formed on May 9. The ultimate target will be located at the zone 4/8 Murray at around 125.00
On the other hand, a pullback towards the 21 SMA at 129.16 will give us an opportunity to sell with targets at 128.16 (5/8) and 125.00 (4/8).
Since April 27, the eagle indicator is giving a bearish signal which confirms our selling strategy in the next few days.
