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UsD/JPY Falls Back To 200-Day MA, Further Losses Likely

USD/JPY is struggling to capitalize on Monday’s bullish candlestick pattern. A break below the 200-day MA, currently at 111.55, looks likely, as the pair has dived out of a rising trend line.

Technical Overview

USD/JPY created an inverted bullish hammer at the 200-day moving average (MA) line on Monday. So far, however, the follow-through has been anything but bullish, which takes the shine off the hammer candle.

As of writing, the spot is trading at the 200-day MA line of 111.55, having faced rejection at 111.69 earlier today.

A failure to capitalize on the inverted bullish hammer and the violation of the ascending trend line, as seen in the 8-hour chart below, indicates scope for a deeper drop below the 200-day MA of 111.55.

Fundamental Overview

The USD/JPY pair edged higher at the beginning of the week, although it faltered near the 112.00 figure, ending the day at 111.70. The advance was backed by US Treasury yields, which recovered from Friday’s lows amid resurgent spending in the US. According to March data, Personal Spending posted its largest one-month growth since 2009, up by 0.9% when compared to February, spooking fears of an economic slowdown. The benchmark yield for the 10-year Treasury note was up to 2.53%. Additionally,  US equities managed to post a modest intraday advance, trimming pre-opening losses.

Japan started the week with a holiday that will extend during the upcoming days, as the country established an unprecedented 10-day holiday amid the Emperor´s abdication in favor of his son. The macroeconomic calendar will be quite light throughout the week, with nothing scheduled in the country.

Article by FXStreet