USD/JPY falls to one week low as bears watch 157.50 range support

USD/JPY dropped to a one week low in Thursday's Asian session, with sellers waiting for a break below multi-week range support near the mid-157.00s before committing to fresh positions. The move came as the dollar sat near a three week low and US bond yields extended their pullback from multi-year highs.

The technical picture leans bearish. Spot trades below the 50.0% Fibonacci retracement at 158.47, and an intraday break through the 100-period Simple Moving Average on the 4-hour chart at 158.07 supports further losses. The Relative Strength Index reads 38.24, and the Moving Average Convergence Divergence line sits below zero, capping rallies. A convincing break of range support could open the 38.2% level at 157.15, then the 23.6% retracement near 155.52 and the swing low anchor around 152.88. Above, resistance runs from 158.07 to 158.47, then 159.79 and 161.66.

Two forces are driving the pair. Bank of Japan Governor Kazuo Ueda's hawkish remarks earlier this week signaled scope for another rate increase as soon as December, underpinning the yen. On the dollar side, traders still price around a 90% chance the Federal Reserve raises borrowing costs again by the end of this year amid inflation fears from volatile energy prices, while Middle East tensions keep a geopolitical risk premium in place.

Next week brings key central bank events, which traders now watch for direction.

For anyone running this on a charting platform, the levels to map are the 100-period SMA at 158.07 and the 50.0% retracement at 158.47 as a tight supply zone, with the mid-157.00s range floor as the trigger for a bearish setup. Check that your 4-hour chart carries the 100-period SMA and Fibonacci retracement tools, and confirm your RSI and MACD indicators are set to the periods you rely on before the central bank events.

Desk rewrite from a fxstreet.com report.

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