Technical Bias: Neutral
Key Takeaways
- US dollar jumped higher against the Japanese yen to trade a touch closer to the 104.00 level.
- There is a monster resistance around the 104.00-05 levels which can act as a catalyst for a correction moving ahead.
- USDJPY support seen at 103.00 and resistance ahead at 104.05.
The US dollar continued to trade higher against the Japanese yen, but buyers need to be very careful chasing the USDJPY pair higher as there is a major hurdle around the 104.00-05 area.
Technical Analysis
There is an important ascending channel formed on the daily timeframe for the USDJPY pair, which is acting as a hurdle for the pair at present. Moreover, the 1.618 extension of the last drop from the 103.08 to 101.50 is around the 104.06 level is just around the channel resistance trend line, and the Daily RSI is around the extreme levels. So, there are several things to note which are pointing to a short-term top in the pair. If the pair fails to break the 104.00-05 resistance area, then there is a chance of a move lower in the near term. If it breaks the mentioned resistance area, then next possible resistance can be seen around the 104.12 level, which is a previous swing high and pivot area.
On the downside, initial support can be seen around the channel trend line at 103.10-05 levels. A break below the mentioned level might call for more losses towards the 200-day simple moving average (SMA), followed by a test of the 100-day SMA.
Fed Chair Yellen Speech
There is an important risk event lined up later during the NY session, as the Fed chairwoman Janet Yellen will be delivering a speech. It would be interesting to see what she has to say about recent hawkish stance in the FOMC meeting minutes.
Overall, as long as the pair is trading below the 104.05 level a short-term correction is possible in the near term.
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