FxWirePro: USD/JPY extends weakness below 129 handle amid less-hawkish Fed policy

Chart - Courtesy Trading View 

USD/JPY was trading 0.29% lower on the day at 128.52 at around 04:20 GMT, bias bearish.

US dollar weakened despite the Fed interest rate hike as expected, and said that it plans to keep raising interest rates to curb elevated inflation. 

Fed Chair Jerome Powell also expressed uncertainty over where interest rates will peak.

Rising expectations for a U.S. economic slowdown this year spurred bets that the Fed could begin cutting interest rates by as soon as the second half of 2023. 

The dollar index and dollar index futures slipped overnight to trade at their weakest levels since April 2022 after the Fed’s announcement.

Major focus now on US January’s nonfarm payrolls report, due on Friday for more signs of cooling in the jobs market.

Technical Analysis:

- GMMA indicator shows major and minor trend are bearish

- Price action is below cloud, Chikou span is biased lower

- Death Cross (bearish 50-DMA crossover on 200-DMA) keeps bias bearish

- MACD on verge of bearish crossover on signal line

Major Support Levels: 127.08 (Lower BB), 124.71 (110-EMA)

Major Resistance Levels: 129.50 (5-DMA), 130.27 (21-EMA)

Summary: USD/JPY breaks range trade and shows signs of further weakness. Scope for fresh multi-month lows below 127.21.