For the USD/JPY, where the yen often exhibits its own risk-aversion prowess, stalling US Treasury rates undermined the greenback and the loss of 115.00 and then 114.00 support placed the dollar in deeper technical jeopardy.  

If US Treasury rates eschew 2.0% and risk-on market sentiment prospers with its negative implications for the US dollar, the USD/JPY will be hard pressed to recover.

There is substantive technical support down to 113.00 but the area beneath to 112.00 was traversed in just two trading sessions in early October and is quite vulnerable.

BULLISH & BEARISH ENTRIES/ TARGET DESTINATIONS :

The MACD (Moving Average Convergence Divergence) cross of the signal line on Tuesday was eminently predictive. The USD/JPY finished lower each following session. The increasing divergence and the steeper price line are signals for further USD/JPY losses. The Relative Strength Index (RSI) crossed its mid-point on Wednesday and the sharp five -session decline since leaving overbought status on January 6 tilts toward continuing slippage.

 Average True Range (ATR) volatility has recovered only modestly since its low on January 3. This has not been a stop-loss driven decline. 

The 21-day moving average (MA) and the 50-day MA were crossed in succession on Wednesday and Thursday. Neither offered appreciable support.

Support is well-documented below Friday's low of 113.49. At 113.00 there is substantial support with the 23.6% Fibonacci level of the January 2021 to January 2022 trend at 112.94 and the 100-day MA at 113.01. Beneath there is minor support at 112.70 from three day's trading in early December. The area below is, for all intents, a gap to 112.00, as the range was traversed, as noted above, in one session on October 11.

US Dollar Supported by Hawkish Interest Rates

Jan 16 2022