The American currency is losing positions in the USD/JPY pair, testing 129.50 for a breakdown and developing the downtrend formed on December 29.
First of all, the growth of "bearish" activity is associated with investors' expectations regarding further easing of monetary stimulus tightening by the US Federal Reserve. At the moment, analysts do not exclude a reduction in the interest rate in the second half of 2023, if the economic situation contributes to this. Since March last year, the US financial regulator has corrected the value by 425 basis points, slowing noticeably at the December meeting. Against this background, the dollar managed to strengthen its position, adding about 8.0% on average and showing the best dynamics since 2015.
In turn, traders expect the Bank of Japan to tighten monetary policy this year. In December, the regulator carried out unplanned purchases of bonds for three days in a row to combat the growth in their yields after it was decided to expand the range of movement around the zero level from 25 to 50 basis points. Analysts took these steps as the first signal for a possible change in the "dovish" course and the subsequent increase in interest rates. Many people associate the launch of the monetary policy tightening cycle with the change of the Governor of the Bank of Japan in April 2023.
On the daily chart, Bollinger Bands are steadily declining. The price range expands, making way to new local lows for the "bears". MACD is going down preserving a rather stable sell signal (located below the signal line). Stochastic shows a steady downtrend but is located in close proximity to its lows, which indicates the risks of oversold US dollar in the ultra-short term.
Resistance levels: 130.00, 131.00, 132.00, 133.00. | Support levels: 129.00, 128.00, 127.00, 126.00.