#USDJPY @ 138.368 comes under renewed selling pressure on Tuesday amid broad-based USD weakness. (Pivot Orderbook analysis)

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• USD/JPY comes under renewed selling pressure on Tuesday amid broad-based USD weakness.
• Rising bets for less aggressive rate hikes by the Fed continue to weigh heavily on the greenback.
• A positive risk tone could undermine the safe-haven JPY and help limit the downside for the pair.

The pair currently trades last at 138.368.

The previous day high was 139.42 while the previous day low was 137.5. The daily 38.2% Fib levels comes at 138.23, expected to provide support. Similarly, the daily 61.8% fib level is at 138.69, expected to provide resistance.

The USD/JPY pair fails to capitalize on the previous day’s recovery from the 137.50 area, or a three-month low and meets with a fresh supply on Tuesday. The intraday selling picks up pace during the early European session and drags spot prices back closer to the 138.00 mark in the last hour.

The overnight US Dollar bounce from a technically significant 200-day SMA fades rather quickly amid expectations that the Fed will slow the pace of its policy tightening. In fact, the markets now expect the US central bank to deliver a relatively smaller 50 bps rate hike in December, which led to the recent sharp decline in the US Treasury bond yields. This, in turn, continues to weigh on the USD and is seen as a key factor exerting downward pressure on the USD/JPY pair.

The Japanese Yen, on the other hand, draws support from speculations that the Bank of Japan (BoJ) will exit its ultra-lose policy stance. In fact, a Reuters poll indicated on Tuesday that more than 90% of economists expect that BoJ’s next policy move will be to unwind its massive monetary easing. The change, however, is not anticipated before the latter half of 2023. This, along with a positive risk tone, could undermine the safe-haven JPY and lend support to the USD/JPY pair.

The global risk sentiment gets a boost amid hints that Chinese authorities intend to loosen COVID-19 restrictions, despite a nationwide surge in cases. This is evident from a modest uptick in the equity markets, which tends to drive flows away from traditional safe-haven currencies, including the JPY. This makes it prudent to wait for strong follow-through selling below the overnight swing low, around the 137.50 region, before positioning for any further losses for the USD/JPY pair.

Market participants now look forward to the release of the Conference Board’s US Consumer Confidence Index, due later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the USD/JPY pair. Traders will also take cues from the broader market risk sentiment to grab short-term opportunities. The focus, however, will be on Fed Chair Jerome Powell’s speech on Wednesday and the NFP report on Friday.

Technical Levels: Supports and Resistances

USDJPY currently trading at 138.25 at the time of writing. Pair opened at 138.95 and is trading with a change of -0.5 % .

The pair is trading below its 20 Daily moving average @ 142.38, below its 50 Daily moving average @ 144.68 , below its 100 Daily moving average @ 141.19 and above its 200 Daily moving average @ 134.08

The previous day high was 139.42 while the previous day low was 137.5. The daily 38.2% Fib levels comes at 138.23, expected to provide support. Similarly, the daily 61.8% fib level is at 138.69, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 137.82, 136.7, 135.9
• Pivot resistance is noted at 139.75, 140.55, 141.67

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