Amid a lack of significant market catalysts, the USD/JPY pair exhibited a sideways movement in early Monday trading. However, the dollar faced a broad sell-off, causing it to retreat against the Japanese yen and test the crucial 50-day moving average (MA) after a notable 1.5% decline on Friday. The pair’s unexpected descent from ¥150.70 to ¥148.20 sparked concerns, especially considering the yen’s status as this year’s major forex underperformer.
Technical Analysis and Potential Bearish Trend:
The USD/JPY pair’s dip below the ¥149 level raised eyebrows among traders, leading to speculation about a potential bearish trend. The 50-day MA served as a critical support level, and further downside movement could bring the 100-day and 200-day moving averages into play. The daily chart suggests that the 100-day MA, currently positioned around ¥146.50, might be the next key level if the pair’s decline persists. Additionally, the formidable 200-day MA looms ominously at levels near ¥141.00, signaling potential challenges ahead.
Dollar’s Broad Weakness Across Forex:
The dollar’s decline against the yen was not an isolated event, as its weakening trend reverberated across multiple forex pairs. The EUR/USD pair recorded a notable 1% gain, surpassing the $1.09 mark, while the GBP/USD pair added a modest 0.4%, reaching $1.2460. The broader weakness of the dollar underscores the need for traders to navigate carefully in the current market environment.
Thanksgiving Week Outlook:
Looking ahead, the upcoming week is shortened due to the Thanksgiving holiday. Traders may find themselves gathered at the forex table, contemplating potential trading opportunities for the remainder of the year. While discussions about future trades are on the agenda, the market’s focus will likely shift to year-end positioning, and traders may reflect on their trading history as they plan for the final stretch of 2022.