USD/JPY Price Analysis: Bulls await sustained move beyond 200-period SMA on H4
|- USD/JPY gains some positive traction, though remains confined in a familiar trading range.
- The mixed fundamental backdrop is seen holding back traders from placing aggressive bets.
- A convincing break below ascending trend-line support will set the stage for deeper losses.
The USD/JPY pair attracts some dip-buying near the 129.20 region on Monday and climbs to a fresh daily top heading into the North American session. Spot prices, for now, seem to have stabilized above the 130.00 psychological mark, though remain well within a familiar trading range held over the past one-and-half week or so.
A goodish pickup in the US Treasury bond yields widens the US-Japan rate differential, which, in turn, is seen weighing on the Japanese Yen (JPY) and lending support to the USD/JPY pair. That said, a weaker risk tone, along with speculation that high inflation may invite a more hawkish stance from the Bank of Japan later this year, limit losses for the JPY. Apart from this, the underlying bearish sentiment surrounding the US Dollar keeps a lid on any meaningful upside for the major.
From a technical perspective, the recent recovery from the 127.20 area, or a multi-month low touched on January 16, has been along upward-sloping trend-line support. The USD/JPY pair, however, seem to struggle to capitalize on the move beyond the 100-period SMA on the 4-hour chart. This is followed by a stiff hurdle near the 130.60-130.65 heavy supply zone, which should now act as a key pivotal point. A sustained strength beyond should pave the way for some meaningful appreciating move.
Given that oscillators on hourly charts have again started gaining positive traction, the USD/JPY pair might then aim to reclaim the 131.00 round-figure mark. The momentum could get extended further towards the post-BoJ swing high, around the 131.55-131.60 area, en route to the 132.00 mark and the next hurdle near the 132.40-132.50 region.
On the flip side, the aforementioned ascending trend-line support, currently around the 129.15 area, might continue to protect the immediate downside. Some follow-through selling below the 129.00 mark will be seen as a fresh trigger for bearish traders and make the USD/JPY pair vulnerable. The subsequent slide could drag spot prices to the 128.00 round figure en route to the multi-month low, around the 127.20 region.
USD/JPY 4-hour chart
Key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.