Is USD/JPY Reversing Now After Breaching 130?
USD/JPY was showing resilience during February and gained more than 10 cents as the USD turned bullish, but resumed the larger downtrend as risk sentiment turned negative and the rallied as a safe haven. This pair has been following a bearish channel and sellers pushed below 130 on Friday, before pulling back up ahead of the closing markets, to end the week around 130.70.
This reinforces the expectation of a continued bearish trend, with the next target located at 129. The 50 SMA (yellow) used to act as support during the uptrend in February, while it has turned into resistance now, helped by the 20 SMA (gray) as well on the H4 chart. Although, if the price breaches 30, it could stop the expected decline and lead to a rise towards testing the 133.30 zone before any new attempt to resume the bearish momentum.
On Friday, there was a rise in selling of European banking shares due to the increasing uncertainty surrounding the ongoing crisis in the banking sector which is not over yet. This caused a ripple effect across the markets and resulted in traders moving towards safer assets such as the Yen, which was further reinforced by a historic purchase of Japanese government bonds, after the Bank of Japan decided to maintain its ultra-loose monetary policy. Japan’s Chief Cabinet Secretary, Matsuno announced that they will allocate over 2 trillion JPY from reserves to counteract the negative impact of rising prices on the economy.
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