FxWirePro: USD/JPY slips below 137 handle as Powell flags slower rate hikes

Chart - Courtesy Trading View 

USD/JPY was trading 0.92% lower on the day at 136.82 at around 04:20 GMT, outlook bearish.

The pair is extending downside for the 4th straight session, edges closer towards 200-DMA support at 134.40.

Federal Reserve Chair Jerome Powell on Thursday said in an address at Washington that the central bank will likely moderate its pace of rate hikes in the coming months.

Powell however, warned that U.S. interest rates will peak at much higher levels than previously expected, due to stubbornly high inflation.

Technical bias for the pair is bearish. Major moving averages are biased lower, momentum is bearish and volatility is high.

MACD and ADX supports downside. Price action is below cloud and Chikou span is biased lower. 

Focus now on Fed’s preferred inflation gauge, the US Core Personal Consumption Expenditure (PCE) Price Index for October, expected 5.0% YoY in October versus 5.1% prior.

Further, the monthly prints of the US ISM Manufacturing PMI for November, expected 49.8 versus 50.2 prior will also be awaited for direction. 

Major Support Levels: 

S1: 134.94 (Lower BB)

S2: 134.40 (200-DMA)

Major Resistance Levels: 

R1: 138.32 (5-DMA)

R2: 139.95 (110-EMA)

Summary: USD/JPY trades with a bearish bias. Scope for test of 200-DMA at 134.40. Bearish invalidation only above cloud.