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US Dollar Forecast: USD/JPY Selloff Pushes RSI into Oversold Zone

Article By: ,  Strategist
August 3, 2024 1:00 PM

US Dollar Outlook: USD/JPY

USD/JPY clears the March low (146.48) as the US Non-Farm Payrolls (NFP) report shows a 114K rise in July versus forecasts for a 175K print, with the selloff in the exchange rate pushing the Relative Strength Index (RSI) into oversold territory for the first time since this year.

US Dollar Forecast: USD/JPY Selloff Pushes RSI into Oversold Zone

USD/JPY extends the recent series of lower highs and lows to register a fresh monthly low (146.42), and the bearish momentum may persist as long as the RSI holds below 30. At the same time, recent developments in the 50-Day SMA (157.34) indicates a potential change in trend as it no longer reflects a positive slope.

In turn, USD/JPY may continue to give back the advance from earlier this year as speculation for a change in Federal Reserve policy seems to be spurring a shift in carry trade interest.

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USD/JPY Price Chart – Daily

Chart Prepared by David Song, Strategist; USD/JPY on TradingView

  • The opening range for August is in focus as USD/JPY approaches the February low (145.90), and the RSI may show the bearish momentum gathering pace as it pushes deeper into oversold territory.
  • A break/close below the 145.30 (78.6% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region opens up 141.50 (38.2% Fibonacci extension), with the next area of interest comes in around the January low (140.82).
  • Nevertheless, lack of momentum to break/close below the 145.30 (78.6% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region may curb the selloff in USD/JPY, but need a move above 150.30 (61.8% Fibonacci extension) for the exchange rate to snap the recent series of lower highs and lows in USD/JPY,

Additional Market Outlooks

US ISM Services Report Preview (JUL 2024)

US Dollar Forecast: EUR/USD Opening Range for August in Focus

British Pound Forecast: GBP/USD Pending Breakout

AUD/USD Forecast: RSI Recovers from Oversold Zone

--- Written by David Song, Strategist

Follow on Twitter at @DavidJSong

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