USD/JPY Enters Oversold Territory, Short-Term Pullback Possible
USD/JPY continues its rapid decline, fueled by expectations of BoJ rate hikes and a weaker US Dollar. The pair's recent plunge has pushed it into oversold territory on the 4-hour RSI, suggesting a potential short-term pullback.
Key Factors:
- BoJ Policy Shift: Anticipation of higher Japanese interest rates strengthens the Yen.
- Weakening USD: Expectations of Fed rate cuts weigh on the US Dollar.
- Oversold RSI: Warrants caution for new bearish bets but doesn't necessarily signal a full reversal.
Technical Outlook:
- Pullback Potential: Oversold conditions could trigger a temporary rebound, potentially towards the 147.60-148.00 resistance zone (confluence of 100 and 50-day SMAs).
- Overall Downtrend: Despite the oversold signal, the short-term downtrend remains intact.
- Downside Targets: If the pullback fades, USD/JPY could retest the March 8 lows (146.48), potentially targeting 146.22 and the 200-day SMA, followed by 145.89 (February 1 low).