USD/JPY Falls Toward 2024 Low to Push RSI into Oversold Zone

US Dollar Outlook: USD/JPY

USD/JPY falls toward the 2024 low (139.58) as it slides to a fresh yearly low (140.47), with the weakness in the exchange rate pushing the Relative Strength Index (RSI) into oversold zone.

USD/JPY Falls Towards 2024 Low to Push RSI into Oversold Zone

USD/JPY fails to defend the rebound from last week as US President Donald Trump warns of ‘non-tariff cheating,’ and the move below 30 in the RSI is likely to be accompanied by a further decline in USD/JPY like the price action from last year.

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The ongoing shift in US trade policy may continue to drag on the Greenback as it raises the threat of a recession, and the US Dollar may face additional headwinds ahead of the Federal Reserve rate decision on May 7 as the central bank comes under pressure to further unwind its restrictive policy.

In turn, the Federal Open Market Committee (FOMC) may retain a dovish forward guidance amid signs of a slowing economy, but it seems as though the central bank is in no rush to implement lower interest rates as Chairman Jerome Powell insists that ‘we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.’

With that said, the US Dollar remains susceptible to future announcements coming out of the White House as President Trump argues that ‘preemptive cuts in interest rates are being called for by many,’ but the RSI may show the bearish momentum abating should it recover from oversold territory.

USD/JPY Price Chart – Daily

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

• USD/JPY seems to be tracking the negative slope in the 50-Day SMA (148.42) as it continues to register fresh yearly lows, and failure to hold above the 2024 low (139.58) may push the exchange rate towards the July 2023 low (137.24).
• Next area of interest comes in around 134.70 (78.6% Fibonacci extension) to 136.00 (23.6% Fibonacci extension), but lack of momentum to close below the 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension) zone may curb the recent decline in USD/JPY.
• Need a move/close above the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region to bring the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone on the radar, with the next area of interest coming in around the monthly high (150.49).

Additional Market Outlooks

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Euro Forecast: EUR/USD Vulnerable to RSI Sell-Signal amid ECB Rate Cut

Canadian Dollar Forecast: USD/CAD Drops as BoC Holds Interest Rate

US Dollar Forecast: USD/CHF Weakness Keeps RSI in Oversold Territory

--- Written by David Song, Senior Strategist

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