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Home ANALYSIS

USDJPY down for the 2nd consecutive day with 200 hour MA holding support

A.R Chowdhury by A.R Chowdhury
March 30, 2022
Reading Time: 4 mins read
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USDJPY down for the 2nd consecutive day with 200 hour MA holding support

USDJPY

The USDJPY held support against its 200 hour moving average

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The  USDJPY 
USD/JPY

The USD/JPY is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Japanese yen of Japan (symbol ¥, code JPY). The pair’s rate indicates how many Japanese yen are needed in order to purchase one US dollar. For example, when the USD/JPY is trading at 100.00, it means 1 US dollar is equivalent to 100 Japanese yen.  The US dollar (USD) is the world’s most traded currency, whilst the Japanese yen is the world’s third most traded currency, resulting in an extremely liquid pair, and very tight spreads, often staying within the 0 pip to 2 pip spread range on most forex brokers. Although the range of the USD/JPY isn’t traditionally particularly high, the lack of large price action often associated with other JPY pairs does make it easier to trade.This is especially true for short-term traders, although without offering a great pip potential. Even though the USD/JPY is the world’s second most traded pair, it’s not as popular as one might think with regards to retail traders.The pair carries a reputation as “boring”, although this isn’t an entirely accurate reflection. Trading the USD/JPYThe JPY is highly regarded as a safe haven currency, with investors often increasing their exposure following periods of uncertainty or market-induced fallouts.As both the US and Japan are highly developed economies, there are several key factors affecting the value of either currencies. This includes a range of economic indicators such as gross domestic product (GDP) growth, inflation, interest rates and unemployment data. Monetary policy by the US Federal Reserve and Bank of Japan are also large determinants in the value of each currency.

The USD/JPY is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Japanese yen of Japan (symbol ¥, code JPY). The pair’s rate indicates how many Japanese yen are needed in order to purchase one US dollar. For example, when the USD/JPY is trading at 100.00, it means 1 US dollar is equivalent to 100 Japanese yen.  The US dollar (USD) is the world’s most traded currency, whilst the Japanese yen is the world’s third most traded currency, resulting in an extremely liquid pair, and very tight spreads, often staying within the 0 pip to 2 pip spread range on most forex brokers. Although the range of the USD/JPY isn’t traditionally particularly high, the lack of large price action often associated with other JPY pairs does make it easier to trade.This is especially true for short-term traders, although without offering a great pip potential. Even though the USD/JPY is the world’s second most traded pair, it’s not as popular as one might think with regards to retail traders.The pair carries a reputation as “boring”, although this isn’t an entirely accurate reflection. Trading the USD/JPYThe JPY is highly regarded as a safe haven currency, with investors often increasing their exposure following periods of uncertainty or market-induced fallouts.As both the US and Japan are highly developed economies, there are several key factors affecting the value of either currencies. This includes a range of economic indicators such as gross domestic product (GDP) growth, inflation, interest rates and unemployment data. Monetary policy by the US Federal Reserve and Bank of Japan are also large determinants in the value of each currency.
Read this Term
fell for only the third time in 17 trading days yesterday. The pair reached the highest level since August 2019 on Monday (the high reached 125.09).

The fall yesterday did take price below its 100 hour moving average for the first time since March 7, but could not sustain momentum below that level, and closed higher.

After a brief rally in the early Asian session today, the pair rotated back to the downside, broke back below its 100 hour moving average and stay below that level. A rising trend line was also broken (the underside of the trendline currently comes in at 122.187). However, the 200 hour moving average (green line in the chart above) did stall the fall. The price has been consolidating in the European session mainly between 121.51 and 122.07.

Support remains at the 200 hour moving average currently at 121.397. The price has not traded below that moving average since March 7. On a break below the 200 hour moving average, the 38.2% retracement of the March trading range cuts across at 121.10. That is also near swing lows from Friday’s trade. A move below that retracement level opens the door for further downside momentum as the sellers win more battles. Hold above the 38.2% retracement and the correction is simply a plain-vanilla variety after the sharp trend move to the upside.

The traders who are buying against the 200 hour moving average would now want to see a move back above the London consolidation high at 122.07 togive more comfort, followed by the broken trendline at 122.187 (and moving higher). A further move above the flattening 100 hour moving average at 122.638 would be a blow to the shorts from above who took bearish action from the breaking of that moving average level earlier today.

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A.R Chowdhury

A.R Chowdhury

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