It records a three-day rally, breaks below 148.50

• USD/JPY retreats after failing to extend its gains despite the US 10-year Treasury yield rising five basis points.
• The technical outlook remains biased, with buyers eyeing a break above 149.14 and targeting 150.00 in the near term.
• A break below 148.00 could present further downside, with key support at 147.00 and the bottom of the Ichimoku Cloud at 146.87.

USD/JPY pulled back after rallying for three straight days, even as the US 10-year Treasury yield rose five basis points. Risk aversion is driving price action as the Middle East war escalates amid a firefight between Israel, Hezbollah and Hamas. At the time of writing, the pair is trading at 148.12 after hitting a daily high of 149.14.

USD/JPY Price Forecast: Technical Insights

USD/JPY failed to extend its uptrend after breaking inside the Ichimoku (Kumo) Cloud, which opened the door for further upside. Besides that, the pair cleared the 50-day moving average (DMA) at 145.17 and since then, buyers have set their sights on 150.00.

The bullish momentum has faded as the relative strength index (RSI) is trending down. However, USD/JPY is bullish in the short term.

Given the context, USD/JPY’s first resistance will be the October 7 daily high of 149.14. Once exceeded, the next stop will be 150.00. If these levels are surrendered, the bulls could challenge the 200-DMA at 151.09.

Conversely, if the pair breaks below 148.00, the bears may drag the exchange rate towards 147.00 as they would like to drive prices towards the latest key support, the bottom of the Kumo at 146.87.

USD/JPY Price Action – Daily Chart