The USDJPY currency pair surged 1.5% on May 12 following the US-China agreement to reduce reciprocal tariffs. Over the next nine trading sessions, the yen was steadily strengthening against the dollar, which pushed the pair down 4.04%, or 6,000 points, by the close of trading on May 23. On May 27, as Trump decided to delay 50% import duties on the EU, the dollar gained against the yen again, and USDJPY rose 2.67% in three trading sessions. This gain rolled back by 37.66% after a US trade court declared tariffs illegal on May 29. Then USDJPY declined another 1.48% to 142.664 by June 2. On June 5, at the time of writing, the pair is trading at 143.000.
After a brief stay above the zero line, the Moving Average Convergence Divergence (MACD) indicator has returned to the negative zone on the daily chart. It has been negative for 74 consecutive trading sessions, supporting the protracted downtrend. The indicator points to strengthening selling momentum. The 4-hour MACD indicator is also below the zero line, showing stronger selling momentum.
The Relative Strength Index (RSI) stands at 37 on the daily chart and points to the prevalence of short positions over the long ones and investor sentiment to sell USDJPY. The 4-hour RSI is at 46. It has risen to this level from the oversold zone and maintains an excess of selling over buying.
According to the ADP report, the US private-sector added 37,000 jobs in May, below the forecasted 110,000. The ISM Services PMI was 49.9. These indicated slower hiring and declining services sector activity in the US, which soured views on the dollar and cemented 10-year bond yields.
In Japan, on the other hand, the business activity index surpassed the 50 threshold to stand at 51.
Trading strategy option: sell at the current price with a Take Profit at 140.650 and a Stop Loss at 145.400.
This content is for informational purposes only and is not intended to be investing advice.
