Sasha Singh
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USDJPY : Testing Support at 107.62, Should Continue to Decline For Now

USDJPY : 4 Hour Chart

USDJPY is currently testing the key support at 107.58 on the 4 hour chart and seems like following a falling wedge pattern which signals that the pair should rise breaking above the falling resistance trend line of the wedge. However on the other hand 50 day SMA crossed below the 100 day SMA signaling a downtrend continuation. If the pair is able to break below the support at 107.58, we might see the pair finding next next nearest support from 107.38 or from the 200 day SMA.

USDJPY : Hourly Chart

However on the hourly chart, the pair is consolidating within a descending triangle trend according to which the pair should decline breaking below the key support at 107.62. So we can infer from the above two charts that the pair might continue to decline for now but the losses are still capped in the long term.

Another factor that might dampen the demand for safe haven is the BOJ monetary policy.The central bank downgraded its assessment of the economy and therefore the US dollar continue to test support. Inflation is the biggest factor in deciding the monetary policy actions. If we take the hike in sales tax into effect the real rate of inflation is 1.1% which is well below the bank's target but the bank seems comfortable with that. It might be possible that the bank have to come up with some more easing next year to improve inflation towards the target level.