#USDJPY @ 128.325 drifts lower for the second straight day and drops to a fresh multi-month low. (Pivot Orderbook analysis)

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• USD/JPY drifts lower for the second straight day and drops to a fresh multi-month low.
• Bets for smaller Fed rate hikes continue to weigh on the USD and exert some pressure.
• Speculations for another BoJ policy tweak boost the JPY and contribute to the decline.

The pair currently trades last at 128.325.

The previous day high was 132.56 while the previous day low was 128.87. The daily 38.2% Fib levels comes at 130.28, expected to provide resistance. Similarly, the daily 61.8% fib level is at 131.15, expected to provide resistance.

The USD/JPY pair breaks down from its intraday consolidative range and drops to the lowest level since late May during the early part of the European session. The pair currently trades just above the 128.00 mark and seems vulnerable to extending its depreciating move.

The US Dollar struggles to capitalize on its modest recovery and languishes near a seven-month low, which, in turn, drags the USD/JPY pair lower for the second straight day. The US consumer inflation figures released on Thursday reinforced expectations that the Fed will soften its hawkish stance. Adding to this, several FOMC members backed the case for a smaller 25 bps lift-off in February and continue to weigh on the greenback.

The Japanese Yen, on the other hand, draws support from speculations that the Bank of Japan (BoJ) could unwind its ultra-loose monetary policy in 2023. Furthermore, reports on Thursday indicated that BoJ will review the side effects of its ultra-loose policy and may take measures to correct distortions in the yield curve. This, in turn, pushes the 10-year Japanese government bond to the highest since mid-2015 and provides an additional lift to the JPY.

The selloff around Japanese government bonds forces the BoJ to announce two rounds of emergency buying. This, along with extremely oversold conditions on intraday charts, could help limit any further losses for the USD/JPY pair, at least for the time being. Market participants now look forward to the US economic docket, featuring the Preliminary Michigan Consumer Sentiment Index for a fresh impetus later during the early North American session.

Technical Levels: Supports and Resistances

USDJPY currently trading at 128.27 at the time of writing. Pair opened at 129.2 and is trading with a change of -0.72 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 132.69, 50 SMA 136.67, 100 SMA @ 140.72 and 200 SMA @ 136.62.

The previous day high was 132.56 while the previous day low was 128.87. The daily 38.2% Fib levels comes at 130.28, expected to provide resistance. Similarly, the daily 61.8% fib level is at 131.15, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 127.86, 126.52, 124.17
• Pivot resistance is noted at 131.55, 133.9, 135.24

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