Loss of upside momentum looks imminent

  • Bearish negative divergence on the RSI (14) is indicating exhaustion in the upside move.
  • The greenback bulls have defended the 10-EMA at 134.69.
  • The 20-EMA is still scaling higher untouched and is favoring a bullish bias.

The USD / JPY pair is displaying wild moves after the release of Japan’s Inflation. The asset is facing barricades around the round-level resistance of 135.00. On a broader note, the major has witnessed a steep fall after failing to sustain above the critical hurdle of 136.00.

The formation of bearish negative divergence on a daily scale is hinting for exhaustion after a juggernaut rally. In a comparison of the asset price and the momentum oscillator, the Relative Strength Index (RSI) (14), a loss of momentum is clearly visible. The asset made a higher high on Wednesday at while the RSI (14) recorded a lower high. It is worth noting that a negative divergence signal is not sufficient to claim a bearish reversal. The concept needs more confirmation from other filters.

The greenback bulls are still defending the 10-period Exponential Moving Average (EMA) at 134.69. The 20-period EMA at 133.40 has not attacked yet and is advancing higher, which favors a bullish bias.

A demand zone in a 131.33-131.58 range will remain a major hurdle for the yen bulls.

For a downside move, the yen bulls need to violate Thursday’s low at 134.27. The occurrence of the same will drag the asset towards June 9 low at 133.29, followed by the above-mentioned demand zone.

On the contrary, the greenback bulls will resume the upside move after overstepping Thursday’s high at 136.30. This will expose the asset to register fresh two-decade highs at 136.89, recorded in October 1998, followed by September 1998 highs at 139.91.

USD / JPY daily chart

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