After the attractive market reaction following the dovish statement by Federal Reserve (Fed) Chairman Jerome Powell, let's look at the price movement on the USD/JPY currency pair chart.
The price has shown a decline to the latest 4-month low when the 137.00 support zone was successfully breached in the Asian session this morning (Thursday).
Previously, the price was seen flat under the 139.300 resistance zone since the end of last week.
The declining pattern that occurred was driven by the weakening of the US dollar after the last few weeks as investors puzzled over further monetary policy decisions by the Federal Reserve (Fed).
Although some members of the Fed had previously taken a hawkish view to continue policy tightening, Jerome Powell early this morning signaled to slow down interest rate hikes.
Although Powell insisted that interest rate cuts will not happen, interest rates will most likely be raised to only 50 basis points instead of 75 before.
Current market sentiment is also seen adding pressure to the US dollar as China begins to ease restrictions on movement in Zhengzhou and Guangzhou after massive protests erupted.
Although the market's recovered sentiment should also have a weak effect on the safe-haven currency Yen, the price movement is now more driven by the US dollar which is more in focus.
The price on the USD/JPY chart that is below the Moving Average 50 (MA50) barrier on the 1-hour time frame is a bearish trend signal.
The decline is expected to continue to test the next concentration zone at 135.00.
Passing the zone will expect the price to reach 132.00 to record the latest lowest level since last August.
However, if the price jumps back above the 137.00 level, the price increase will retest the resistance at 139.30 which has been a price barrier throughout this week.
Successfully breaking through that resistance will push the price towards the next concentration zone which is around 142.00.
