A Bearish Rejection at Key Moving Average Resistance Signals Further Losses

Summary:

The MACD displays a bearish histogram that is beginning to deepen, suggesting that downward momentum is gaining strength.

Sell USDJPY

EXP

Trading

156.413

ENTRY

153.060

TGT

160.700

156.896 +0.149 +0.10%

Point

Flat

153.060

TGT

CLOSING

156.413

ENTRY

160.700

In Japan, data released on Friday by the Statistics Bureau showed that the country's National Consumer Price Index (CPI) increased by 2.1% year over year in September, up from the previous reading of 1.9%. Meanwhile, core CPI, which excludes volatile fresh food prices but includes fuel costs, also rose by 2.1% year over year. This followed a 1.8% increase in August, revised upward from 1.7%, and was in line with market expectations.

The report indicated that Japanese inflation had moved above the Bank of Japan's (BoJ) target level in September for the first time in nine months, suggesting that price pressures may be regaining momentum.

Japan's Economy Minister, Minoru Kiuchi, stated on Friday that the conditions required for the government to officially declare an end to deflation had not yet been met. Kiuchi added that any decision on the matter would take several factors into account, with the aim of ensuring that Japan does not return to a period of persistent price declines.

Tensions in the Middle East also intensified as the Houthis and Saudi Arabia exchanged attacks. These developments, alongside the US order to evacuate its embassy in Saudi Arabia and news reports indicating that Washington and Jerusalem are preparing to strike Iran, have pushed energy prices higher amid growing geopolitical uncertainty.

In the United States, initial jobless claims for the week ending October 17 came in better than expected at 194,000, below both market estimates and the previous reading of 200,000. The figure also marked a low not seen in nearly 57 years. Meanwhile, the four-week moving average declined to 197,750, pointing to a labor market environment characterized by relatively low levels of layoffs.

Last week, US inflation data came in higher than expected. However, traders have so far ruled out the possibility of an interest rate hike in October. Although most Federal Reserve (Fed) officials support another rate increase, they would prefer to assess incoming economic data before making a further adjustment to monetary policy.

Meanwhile, the yield on the 10-year US Treasury note fell by 15 basis points to 4.963%, reaching its lowest level since September 23. Treasury yields declined sharply as demand for safe-haven assets increased amid heightened geopolitical tensions. A Bearish Rejection at Key Moving Average Resistance Signals Further Losses_1

A Bearish Rejection at Key Moving Average Resistance Signals Further Losses_1

Technical Analysis

USDJPY moved lower after failing to break above the 200-period moving average on the daily chart, currently positioned at 158.53. The 100-period moving average is slightly higher, at 159.33, creating a resistance area that could continue to limit any recovery. This strong rejection increases the possibility of further downside movement toward the local support level at 153.06. This area also coincides with a local support trendline and the level reached on September 9, when the pair rebounded to the upside. As a result, the same zone could attract buyers again if the price returns to it.

Regarding the oscillators, the Relative Strength Index (RSI) is currently at 37, placing it in bearish territory while still leaving room for further downside movement before reaching oversold conditions. Meanwhile, the MACD displays a bearish histogram that is beginning to deepen, suggesting that downward momentum is gaining strength. The signal lines remain slightly above the neutral level after briefly recovering above it, but if shift back quickly toward bearish territory, reinforces the downside outlook. If these signals remain aligned, USDJPY could extend its decline toward local support at 153.06.

Trading Recommendations

Trading direction: Sell

Entry price: 156.36

Target price: 153.06

Stop loss: 160.70

Validity: Nov 03, 2026 15:00:00

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