USD/JPY outlook: Firm break above daily cloud top to boost bullish outlook, bear-trap underpins recovery

Slobodan Drvenica Windsor Brokers

USD/JPY

USDJPY regained traction and bounced near Thursday’s one-week high after the Bank of Japan left rates unchanged but signaled potential earlier than expected rate hikes that temporarily inflated yen.

Strong rally in past two days was sparked by Fed’s overall less dovish than expected projections for 2026.

Wednesday’s bullish candle with long tail reflected turbulent post-FOMC action, which resulted in strong downside rejection and formation of bear-trap under 100DMA) and provided positive signal.

Fresh recovery returned to daily Ichimoku cloud and rose through entire cloud (spanned between 146.72 and 147.87) to probe above cloud top on Friday.

Close above cloud top is needed to boost positive near-term outlook, with break above nearby Fibo barrier at 148.20 (50% retracement of 150.91/145.47) to confirm signal and expose targets at 148.58 (200DMA), 148.84 (Fibo 61.8%) and 149.13 (Sep 3 top).

Daily studies are bullishly aligned but require further improvement to stronger underpin the action.

Caution on failure to clear daily cloud top that may keep bulls on hold, though will be biased higher while holding above 55DMA / broken Fibo 38.2% (147.56).

Res: 147.87; 148.20 148.58; 148.84.
Sup: 147.56; 147.19;146.72; 146.23.

Interested in USD/JPY technicals? Check out the key levels

1. R3 150.08
2. R2 149.17
3. R1 148.58
PP 147.68
1. S1 147.08
2. S2 146.18
3. S3 145.59

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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