• USDJPY trades sideways, a tad below its 200-day SMA

• Quieter trading session amidst lower liquidity

• Momentum indicators are in waiting mode

USDJPY is trying to record a green candle today, trading a tad below the key 200-day simple moving average (SMA). The festive period mood is producing quieter trading sessions as the market is already looking ahead to next week’s busy calendar.

In the meantime, the momentum indicators clearly confirm the lack of appetite from market participants. The Average Directional Movement Index (ADX) is edging lower, below its 25-threshold and the RSI remains stuck below its 50-midpoint. Crucially, the stochastic oscillator is trading sideways, a tad above both its moving average and oversold territory.

Should the bears remain hungry, they could first try to break below the busy 142.49-142.93 range, which is populated by 61.8% Fibonacci retracement of the October 21, 2022 – January 16, 2023 downtrend and the 200-day SMA. They could then face strong support at the 139.38-140.69 area. Even lower, a move towards the 38.2% Fibonacci retracement level at 136.66 could allow the bears to record a new 5-month low.

On the flip side, the bulls are keen to recover part of their recent losses. They could successfully defend the 142.49-142.93 area and then push USDJPY towards the September 7, 2022 high of 144.99 and the November 13, 2023 descending trendline. If successful, they could then have a go at overcoming the 146.65-147.80 area.

To sum up, USDJPY is clearly in festive mode with the bears feeling much more relaxed after the aggressive downleg from the November highs.