USDJPY reclaims 140.00, after dropping to multi-month lows at around 138.00s

After diving more than 5% in the last week, the USDJPY is staging a comeback, bouncing off the last week’s lows around 138.00 and climbing over 150 pips. Factors, like Federal Reserve’s policymaker hawkish commentary, triggered a risk-off impulse, as depicted by US equities falling. At the time of writing, the USDJPY is trading at 140.28, above its opening price by 1.10%.

US Dollar underpinned by Federal Reserve commentary

Sunday’s hawkish commentary by Federal Reserve (Fed) Governor Christopher Waller shifted sentiment sour. Waller commented that the Fed “still has ways to go” lifting interest rates and added that the Central Bank could moderate the size of interest-rate increases to 50 bps at their December meeting or the one after that, reiterating that the US central bank is not close to pausing.

Meanwhile, the Fed Vice-Chair Lael Brainard is crossing newswires, saying that the most recent CPI suggests that Core Personal Consumption Expenditures (PCE)  could also show a reduction. She added that it would be appropriate to slow the pace of hikes, and further rate hikes would be data-dependent.

The US Dollar Index, a gauge of the greenback’s value against a basket of peers, extended its gains by 0.36%, up at 106.807, after falling to three-month lows at 106.281. in the meantime, the US 10-year Treasury yield edged down one bps at 3.865%, capping the USDJPY rally around the current exchange rates.

Japanese economy picking up, says BoJ Kuroda

Aside from this, in the Asian session, the Bank of Japan (BoJ) Governor Haruhiko Kuroda said the economy was picking up and reiterated that monetary policy conditions would remain at ease to support the US economy. Kuroda added that the BoJ is watching the impact of raw material inflation and monitoring the effects of the FX market.

USDJPY Price Analysis: Technical outlook

The USDJPY is neutral biased, even though it cleared the 100-day Exponential Moving Average (EMA) at 140.79, exposing the USDJPY to selling pressure. Of note, the Relative Strength Index (RSI) exited from oversold conditions, suggesting that sellers are losing momentum. Also, USDJPY’s last two days’ price action is forming a bullish-harami pattern.

If the USDJPY clears the 100-day EMA, the next resistance would be the psychological 141.00 figure. Once cleared, the following resistance would be November’s 11 daily high at 142.48, followed by the 50-day EMA at 145.37.