The USD/JPY currency pair on Friday extended declines to new 2-week lows following the Bank of Japan’s interest rate decision. The currency pair continues to trade within a descending channel formation in the 60-min chart.

The pair has now fallen several levels below the 100-hour moving average line to trade at about 136.063. As a result, the currency pair has descended into the oversold conditions of the 14-hour RSI.

USD/JPY Fundamentals Overview

From a fundamental perspective, the USD/JPY currency pair is trading at the back of a relatively busy period in both markets. On Thursday, the Bank of Japan decided to keep the base interest rate unchanged at -0.1% in line with expectations. The Asian nation also reported a (Yoy) 2.4% increase in the national Consumer Price Index for June, compared to the previous month’s increase of 1.5%. The CPI ex-food and energy and CPI ex-fresh food increased by 1% and 2.2% (inline), respectively versus, 0.8% and 2.1%, in the previous period.

In the US, the preliminary S&P Global Manufacturing PMI for July outperformed the market forecast of 52 with 52.3. On the other hand, the PMI Composite and the Services PMI, both missed expectations. Earlier in the week, the initial jobless claims came short of 240k with 251k, while the continuing claims missed 1.34 million with 1.384 million. On the other hand, the Philadelphia Fed Manufacturing Survey for July came in at -12, missing the consensus forecast of 0.

USD/JPY Technical Analysis (the 60-min Chart)

Technically, the USD/JPY currency pair seems to be trading within a descending channel formation in the 60-min chart. This indicates a significant short-term bearish bias in the market sentiment. 

Therefore, the bears will be looking to ride the current downward trend by targeting profits at about 135.562 or lower at 135.109. On the other hand, the bulls will be targeting short-term rebounds at approximately 136.494, or higher at 136.921.

USD/JPY Technical Analysis (the Daily Chart)

In the daily chart, the USD/JPY currency pair appears to have recently pulled back to complete a downward breakout from an ascending channel formation. This indicates an attempt by the bears to take control of the pair away from the bulls.

Therefore, they will be looking to extend the current pullback toward 134.418 or lower to 132.127. On the other hand, the bulls will be targeting long-term profits at about 1.37.429, or higher at 139.328.