• 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

USD/JPY

Overview
Today last price 133.66
Today Daily Change 0.48
Today Daily Change % 0.36
Today daily open 133.18
 
Trends
Daily SMA20 136.38
Daily SMA50 134.47
Daily SMA100 130.26
Daily SMA200 122.45
 
Levels
Previous Daily High 133.19
Previous Daily Low 130.4
Previous Weekly High 137.46
Previous Weekly Low 132.5
Previous Monthly High 139.39
Previous Monthly Low 132.5
Daily Fibonacci 38.2% 132.12
Daily Fibonacci 61.8% 131.46
Daily Pivot Point S1 131.32
Daily Pivot Point S2 129.46
Daily Pivot Point S3 128.53
Daily Pivot Point R1 134.11
Daily Pivot Point R2 135.05
Daily Pivot Point R3 136.91

 

 

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