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USD/JPY Rebound Keeps RSI Above Oversold Zone Ahead of Fed Testimony

Article By: ,  Strategist
February 10, 2025 5:32 PM

US Dollar Outlook: USD/JPY

USD/JPY extends the rebound from the monthly low (150.93) to keep the Relative Strength Index (RSI) out of oversold territory, but the semi-annual testimony with Federal Reserve Chairman Jerome Powell may sway the exchange rate as the central bank pursues a less restrictive policy.

USD/JPY Rebound Keeps RSI Above Oversold Zone Ahead of Fed Testimony

The recent selloff in USD/JPY seems to have stalled ahead of the December low (148.65) as it snaps the series of lower highs and lows from last week, and the exchange rate may attempt to retrace the decline from the start of the month amid the limited reaction to the weaker-than-expected US Non-Farm Payrolls (NFP) report.

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US Economic Calendar

Nevertheless, fresh remarks from Chairman Powell may influence USD/JPY as the central bank pledges to ‘adjust our policy stance in a manner that best promotes our maximum-employment and price-stability goals,’ and it remains to be seen if the Federal Open Market Committee (FOMC) will respond to the ongoing change in US trade policy as President Donald Trump proposes a 25% tariff on imports of steel and aluminum.

In turn, more of the same from Chairman Powell may curb the rebound in USD/JPY should the Fed stay on track to implement lower US interest rates, but the prepared remarks for Congress may fuel the recent rebound in the exchange rate if the central bank adopts a less dovish forward guidance.

With that said, USD/JPY may stage a larger recovery over the coming days as it no longer carves a series of lower highs and lows, but the exchange rate may continue to give back the advance from the December low (148.65) as the RSI slips at its lowest level since September.

USD/JPY Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView

  • USD/JPY snaps the recent series of lower highs and lows as it extends the rebound from the monthly low (150.93), with a move above 153.80 (23.6% Fibonacci retracement) bringing the monthly high (155.89) on the radar.
  • A break/close above 156.50 (78.6% Fibonacci extension) may push USD/JPY towards the January high (158.88), but a move below the opening range for February may lead to a test of the December low (148.65).
  • A break/close below the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone opens up the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region, with the next area of interest coming in around the October low (142.97).

Additional Market Outlooks

Canadian Dollar Forecast: USD/CAD Remains Susceptible to Trump Tariffs

AUD/USD Recovery Stalls Ahead of January High

US Dollar Forecast: EUR/USD Snaps Back Ahead of January Low

Gold Record High Price Pushes RSI Into Overbought Zone

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

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