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Technical analysis of the USD/JPY pair
USD/JPY posted sharp losses on Thursday, down about 0.5% in the afternoon session, a day after the Federal Reserve announced that it may halt interest rate hikes after 500 basis points of cumulative tightening since March 2022. The aversion appears to be From the risk the Japanese yen also benefits, with the US stock market under water, affected by banking sector problems and fears that More regional banks will soon bite the dust.
In terms of technical analysis, the USD/JPY pair has fallen significantly after a failed attempt to regain its 2023 highs set in March. As the chart below shows, the sellers have effectively pushed back the bulls from the 137.95 area, paving the way for a sharp decline over the past three days.
With the bears back in control of the market, the pair has approached a confluence of support at 134.00/133.75, where the 50-day simple moving average aligns with the short-term bullish trend line and the 38.2% Fibonacci retracement of the January-March rally. . For hopes of resuming the recent upside trend, this floor must hold, otherwise there could be a larger decline towards 131.70.
In case of a bullish reversal from current levels, the initial resistance is near the psychological round number mark at 135.00. A sustained move above this technical barrier is needed to revive the positive momentum and you have a steady chance of reclaiming the 200-day SMA in the near term.
Technical chart of the USD/JPY pair
USD/JPY chart set up using TradingView
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Technical analysis of the Australian dollar / US dollar
The Australian dollar was unable to take advantage of the Fed’s decision to strongly suggest that its record price had reached the peak of the cycle. Although the AUD/USD managed to post gains on Thursday, its advance was modest, as bearish mood associated with US regional banking turmoil reduced appetite for riskier currencies, preventing a meaningful rally.
If volatility increases in response to the ongoing developments in the US banking sector, then the Australian dollar will have a hard time outperforming its US counterpart given it. High sensitivity to underlying risk trends and global sentiment. For this reason, it is very important to keep an eye on the market news coming out of the US
From a technical point of view, AUD/USD is at a critical juncture, as the pair is testing the block resistance, which extends from 0.6700 to 0.6740, where two major trend lines converge with the 200-day SMA and 38.2% Fibonacci of the sell-off. 2022.
The battle between the bulls and the bears should be fierce in the 0.6700/0.6740 region, but if the former overpowers the latter and leads to a breakout, the broader trading bias will turn more positive for the Aussie, paving the way for a potential rally towards 0.6800, followed by 0.6890.
Alternatively, if prices are rejected from the technical resistance and resume their decline, the initial support is located at 0.6580. Buyers must defend this floor at all costs, otherwise a deeper decline towards 0.6515 could start in a short time.