The USD/JPY pair experienced a significant decline below 155.00, with the price falling inside the Ichimoku Cloud. This movement has shifted the pair from a neutral upward bias to a neutral outlook as it consolidates within the ‘cloud.’ Key support levels to watch for include 154.72 (50-DMA), 154.00, and 153.31 (bottom of Kumo), while key resistance levels are at 154.93 (Tenkan-Sen) and 156.17 (top of Kumo).
The drop in the USD/JPY was triggered by economic data from the United States that raised speculations about a potential rate cut by the US Federal Reserve in September. The pair traded at 154.72 after reaching a daily high of 156.48, indicating a significant decline of 0.80% late in the North American session.
From a technical standpoint, the USD/JPY is now in a consolidation phase inside the Ichimoku Cloud (Kumo) while testing the 50-DMA. Further consolidation is expected if buyers are unable to push the exchange rate above the top of the Kumo around 156.10-15. The pair is likely to remain within the 153.30-156.00 range, with a breach of the 50-DMA at 154.72 leading to the 154.00 support level and then the bottom of the Kumo at 153.31.
On the other hand, if buyers manage to reclaim the 155.00 level, the next resistance level to watch for would be the Tenkan-Sen at 154.93, followed by the 155.00 psychological level and then the top of the Kumo at 156.17. The USD/JPY price action on the daily chart shows a clear indication of the recent decline and the key levels to monitor for potential further movement.
In conclusion, the USD/JPY pair has experienced a significant decline below 155.00 and is currently consolidating inside the Ichimoku Cloud. Key support and resistance levels have been identified, and further consolidation is expected as buyers and sellers battle for control. Traders should keep a close eye on the 50-DMA as a break below could lead to further downside towards the 154.00 and 153.31 levels, while a break above the Tenkan-Sen could signal a potential reversal towards the 156.17 level. The USD/JPY remains a pair to watch for traders looking to capitalize on potential price movements in the coming sessions.
