USD/JPY bears taking back control on volatile 101 handle

USD/JPY is racing away to the downside in Tokyo on the short-term sticks, dropping from a consolidative phase at 101.80 down to 101.46 the low.

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USD/JPY tested 101.55 overnight in the volatility surrounding the FED's Brainard dovish comments that came more dovish than expected. The pair then rallied on risk performing better to 101.88 and drifted back slightly as markets normalised with a strong close on Wall Street. Eyes are now firmly placed on the BoJ and FOMC at the end of this month with the BoJ being a major risk factor considering the recent sentiment that the Central bank has run out of options.

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USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that in the short term, the 1 hour chart shows that the price is being capped by a bearish 100 SMA, whilst technical indicators head south near oversold readings,  favoring a continued decline. In the 4 hours chart, the price has broken below its 100 and  200 SMAs, while technical indicators have turned sharply lower, with the Momentum entering negative territory and the RSI accelerating its decline around 36, supporting a continued decline towards 100.65, a major long term Fibonacci support.

The Federal Reserve is indeed divided