USD/JPY has turned bearish on longer-term charts since October last year and last week the decline resumed again, pushing the price below 130 as this pair fell to 127.20s. But, we saw a reversal higher yesterday and the price turned above the 50 SMA (yellow), which seems to have turned into support.

USD/JPY H1 Chart – Will the 50 SMA Turn Into Resistance Now?

Sellers pushed the price below the 50 SMA a while ago

It held the decline during the retreat yesterday but it got broken earlier today. We were long earlier above the 50 SMA, but turned to bearish after this moving average was broken. We opened a sell USD/JPY signal a while ago so let’s see how it will go, although the pressure has turned to the downside today. The Bank of Japan is shifting its policy slowly which has been supporting the JPY, so the larger downtrend is resuming again after the break of the 50 SMA. Goldman Sachs also sees this pair lower toward 125 as well.

From Goldman Sachs:

• “We have long been arguing that the bigger driver of the cross should be US rates rather than domestic monetary policy, though our estimates suggest we could see another USD/ PY sell-off of roughly 3%—or a decline to levels just below 125 versus current spot,” GS notes.
• “While our economists expect the Boj to keep YCC in place with possible further tweaks to improve its sustainability, the increased risk of a complete exit means we see more limited room for USD/JPY upside and, as a result, recently revised down our forecast path,” GS adds.

USD/JPY Live Chart