USD/JPY Outlook Mired by Failure to Test December High

USD/JPY appears to be reversing ahead of the December 2022 high 138.18 as it fails to hold above 200-day SMA, but the Bank Of Japan interest rate decision may curb the recent decline in the exchange rate as the central bank is expected to retain its easing cycle.

USD/JPY snaps the series of higher highs and lows from earlier this week to keep the Relative Strength Index below overbought territory, and the exchange rate may continue to give back the advance from earlier this month as the oscillator shows the bullish momentum abating.

However, the BOJ is expected to retain the Quantitative and Qualitative Easing program with Yield-Curve Control at Governor Haruhiko Kurdo’s last meeting, and more of the same from the central bank may produce headwinds for the Japanese Yen as the board retains a dovish forward guidance for monetary policy.

In turn, USD/JPY may continue to hold above the monthly low as Federal Reserve Chairman Jerome Powell warns of higher interest rates, and data prints coming out of the US fuel speculation for a more restrictive policy as the NFP report is anticipated to show a further improvement in job/wage growth.

USD/JPY snaps the recent series of higher highs and lows after failing to test the December 2022 high, with the Relative Strength Index still below 70 as the exchange rate struggles to hold above the 200-day SMA.

A close below the 136.00 handle may lead to a test of the monthly low as the bullish momentum abates, with the next area of interest coming in around 132.60 to 133.90.

Nevertheless, USD/JPY mat stage further attempts to test the December 2022 high if it closes above the 136.00 handle, with the next region of interest coming in around 138.70 to 140.00.