USD/JPY Price Analysis: Bulls corral into 134.00s but penned in by 50-day MA
|- USD/JPY gains positive traction for the second straight day and inches closer to the weekly high.
- The widening US-Japan yields differential, and the risk-on impulse undermine the safe-haven JPY.
- Bulls facing tough resistance from the 50-day SMA at 134.60, should await clean break before placing fresh bets.
The USD/JPY pair catches fresh bids near the 132.30-132.25 region and steadily climbs back closer to the weekly high set earlier this Wednesday. The pair is currently trading around the 133.65-133.70 area, up nearly 0.40% for the day and is supported by a combination of factors.
A further rise in the US Treasury bond yields, bolstered by the overnight hawkish remarks by several Fed officials, widens the US-Japan rate differential. This, along with the risk-on impulse, undermines the safe-haven Japanese yen and pushes the USD/JPY higher for the second successive day.
Looking at the broader picture, the post-FOMC sharp downfall stalled on Tuesday near the 130.40-130.35 confluence support. The mentioned area comprises the 100-day SMA and the 50% Fibonacci retracement level of the April-July rally, which should now act as a pivotal point for the USD/JPY pair.
Bullish traders, meanwhile, struggled to make much headway above 134.00 after meeting tough resistance at the 50-day SMA at 134.60. If they break above the 135.00 psychological mark is the next hurdle, en route to the 23.6% Fibo. level, around the 135.00 region.
On the flip side, the 38.2% Fibo. level, around the 132.50 area, now seems to protect the immediate downside ahead of the 132.00 round figure and the 131.65-131.60 region. Failure to defend the said support levels could make the USD/JPY pair vulnerable to sliding back below the 131.00 mark.
The downward trajectory could further get extended towards the 130.40-130.35 confluence support. A convincing break below the latter would be seen as a fresh trigger for bears and set the stage for an extension of the recent corrective slide from the 24-year peak touched on July 14.
USD/JPY daily 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.