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The US Dollar Index came under pressure this past week, as the Japanese yen emerged as one of the strongest performers across the Forex market. From a technical perspective, the USD/JPY chart has been showing a few bearish signs again after being neutral for much of the summer, writes Fawad Razaqzada, technical analyst at Trading Candles.

The recent leg lower in the US dollar has been fueled in part by falling US bond yields and the US government shutdown, which has been keeping the dollar under pressure across the board. Markets have been weighing the prospect of an extended stalemate, which could sap consumer confidence and deepen concerns over job security.
 

The Japanese yen appears to have been the primary beneficiary of the latest government shutdown which officially began on Wednesday, and hopes of a quick resolution appear slim. The USD/JPY currency pair dropped to the 147 handle in recent trading. The yen was seen quietly gaining across the board, too. The GBP/JPY pair, for example, slipped to the 198 mark after failing to hold the psychological 200 level.

Overall, the USD/JPY pair has been choppy for months — flat in June, higher in July, lower in August, and then bouncing in early September. In the last few days, however, sellers have regained the upper hand, threatening to end a four-week winning streak.

The key level to watch is 147.50, which was recently taken out. A break below this level has already sparked a wave of stop-loss selling, with the first objective of 147 being met. Should the pair hold below the 147.50 figure, then this scenario could potentially open the path towards the levels of 146.30, 146, and possibly 145 in the near-term.

About the Author

Fawad Razaqzada provides retail and professional traders succinct fundamental and technical analysis on his own website at TradingCandles.com. He is an experienced analyst and economist working for leading global FX brokers, most recently at FOREX.com and City Index.

A graduate of Brunel University with a degree in economics, Mr. Razaqzada offers premium trade signals to subscribers, and trading education to help shorten the learning curves of developing traders. He covers a wide range of markets, including forex, commodities, stock indices, and cryptocurrencies.

Mr. Razaqzada is an expert at reading price action, which together with his deep understanding of economics and market fundamental allows him to provide a unique style of financial market analysis. His market comments are regularly quoted by the leading financial publications such as Reuters and Market Watch.

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