FxWirePro: USD/JPY comatose below 21-EMA, US recession fears escalate keeping traders wary

Chart - Courtesy Trading View 

USD/JPY was trading in tight range with session high at 146.78 and low at 146.30.

The major remains depressed below 21-EMA as US recession fears escalate keeping traders wary.

Analysts at Goldman Sachs in a report said that the chances of the US economy entering into a recession in the next year stand at 35%. 

Goldman Sachs cites wide deviation in desired inflation target and current inflation rate, aggressive Fed policy tightening, and uncertain domestic and politics conditions for escalating recession fears.

Outcome of the US mid-term elections will impact price action. A majority win for Republicans could trigger political instability.

Of major significance later this week will be US Consumer Price Index (CPI) data due Thursday, which will determine whether the Fed will increase the peak for terminal rates or will leave them unchanged.

Preliminary estimates suggest the headline CPI is likely to slip lower to 8.0% vs. the prior release of 8.2%. While the core CPI that excludes oil and food prices is seen lower at 6.5% against 6.6% recorded earlier.

Major Support Levels: 

S1: 145.63 (Lower BB)

S2: 144.44 (55-EMA)

Major Resistance Levels: 

R1: 147.10 (21-EMA)

R2: 147.92 (20-DMA)

Summary: USD/JPY price action is below 200H MA. Momentum is bearish, MACD and ADX support downside in the pair. 

That said, major trend remains bullish. 55-EMA is immediate support at 144.44. Change in near-term dynamics likely on break below.