The US dollar (USD) remains on the back foot versus the Japanese yen (JPY), poised to retest the August 2024 lows around ¥141.69.

Active Conversion Line/Base Line Resistance

While downside momentum has noticeably slowed for the USD/JPY currency pair, sellers are still in control. You will probably see that since the Conversion Line (blue at ¥144.49) crossed below the Base Line (red at ¥145.58) at the end of July, price action has found resistance between these two values on a number of occasions.

Going forward, attention will likely remain on the area between the Conversion Line and Base Line to provide resistance. However, should that area fail to hold ground, we could see the Ichimoku Cloud step in and offer sellers resistance to work with (made up between the Leading Span B at ¥151.82 and the Leading Span A at ¥145.03).

Price Direction

The area between the Conversion Line and Base Line will likely be monitored closely for bearish intent when the unit retests the space. The lower boundary of the Ichimoku Cloud will also be closely watched in the event of a spike higher. Ultimately, momentum remains in favour of sellers, and a test of either resistance area could allow traders to act.

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