Title: USD/JPY Continues Uptrend, Targets 149.00 Level as Bullish Momentum Builds
Original author: FxWirePro via EconoTimes
Source: https://www.econotimes.com/FxWirePro-USD-JPY-gaining-momentum-for-a-move-towards-14900-level-1716115
The USD/JPY currency pair has been showing signs of renewed bullish strength, building momentum toward the critical 149.00 level. After a phase of consolidation, the pair has resumed its upward trajectory, supported by a combination of technical and fundamental factors. Strong U.S. economic data, diverging monetary policy paths between the Federal Reserve and the Bank of Japan (BoJ), and general market sentiment shifts have contributed to this upward movement. As the pair inches closer to key resistance levels, traders are closely watching for confirmation of breakout signals and potential long-term directional shifts.
This article will explore the key drivers behind the recent appreciation in the USD/JPY pair, delve into technical chart indicators pointing toward a continued uptrend, and assess fundamental influences such as central bank activity and macroeconomic indicators. We’ll also take a look at sentiment across the markets and how it’s likely to influence near-term price action.
Key Themes Supporting USD/JPY Strength
A confluence of positive factors has allowed the USD/JPY pair to extend its gains, with the following themes dominating:
• Divergent Central Bank Policies:
– The U.S. Federal Reserve has maintained a hawkish stance, emphasizing its commitment to taming inflation even at the cost of tight financial conditions.
– By contrast, the Bank of Japan continues to maintain ultra-loose monetary policy, including negative interest rates and yield curve control measures. This divergence in policy expectations supports the strengthening of the U.S. dollar against the yen.
– A widening interest rate differential increases the attractiveness of the dollar as investors seek higher yields on U.S.-denominated assets.
• Robust U.S. Economic Performance:
– Recent U.S. economic data including strong labor market numbers, higher-than-expected GDP growth, and resilient consumer spending have reinforced confidence in the U.S. economy’s strength.
– High inflation prints have also added to market anticipation that the Fed will keep interest rates elevated for a prolonged period.
• Safe-Haven Fluctuations Favor Dollar Flows:
– While the Japanese yen is traditionally regarded as a safe-haven asset, recent geopolitical stability and confidence in U.S. governance have led investors to favor the U.S. dollar in this role.
– Dollar strength in risk-on environments also supports the buying of USD/JPY during global market rallies.
• Speculative Positioning and Technical Breakouts:
– Technical movements, including a series of higher lows and higher highs, suggest bullish control of the pair.
– Market participants are building long positions in anticipation of reaching key psychological levels such as 148.00 and 149.00.
Analyzing the Technical Setup
The recent price behavior in the USD/JPY shows that the pair is gradually building toward a break above resistance at the 148.50 level and ultimately eyeing the 149.00 handle. The technical indicators suggest that the momentum remains in favor of the bulls.
• Moving Averages Signal Sustained Uptrend:
– The 21-day moving average (DMA) is currently trending above the 55-DMA, indicating short-term bullish momentum remains robust.
– Both moving averages are sloped upward, confirming a medium-to-long-term bullish bias.
• Relative Strength Index (RSI):
– The daily RSI reading has approached the 65–70 range, signaling strengthening bullish momentum, although not yet in overbought territory.
– This leaves room for further upside movement before major resistance is encountered due to overextension.
• MACD (Moving Average Convergence Divergence):
– The MACD line remains above the signal line in bullish territory, suggesting continued buying activity.
Explore this further here: USD/JPY trading.