Original article credit: Written by ActionForex.com.
USD/JPY Mid-Day Outlook: Technical Analysis and Market Insights
The USD/JPY pair experienced mild recovery during the mid-day session, yet the upside momentum remains capped below a notable resistance region. As market participants weigh the effects of U.S. Treasury yields, Federal Reserve policy outlook, and geopolitical factors, the currency pair continues to move within a relatively constrained range. This article provides a deeper look at the recent movement in the pair, analyzes key technical indicators, and outlines possible scenarios for the near-term direction of USD/JPY.
1. Recent Price Performance and Intraday Bias
– USD/JPY managed a brief rally earlier in the session but encountered resistance below the 158.25 level.
– The pair continues to consolidate within a narrow band after previous strong gains brought it close to multi-decade highs near the 160.00 mark.
– As of this writing, intraday bias stays neutral given the absence of a decisive move either above 158.25 or below near-term support levels.
2. Near-Term Technical Setup
– The currency pair holds above both the 55-period and 200-period simple moving averages (SMAs) on the 4-hour chart, indicating that underlying medium-term strength is intact.
– However, price action has been constrained within a wedge pattern, suggesting consolidation or a potential shift in momentum.
– A break above the 158.25 resistance would resurrect bullish momentum and likely send the pair toward the near-term high of 158.57.
– Beyond this, further resistance lies at 160.17, a psychological barrier that previously triggered intervention fears from Japan.
3. Support Levels to Watch
Should bearish momentum emerge, the following levels are key:
– Immediate support lies at 157.04, where previous minor pullbacks halted.
– A fall below this level sets the stage for a deeper correction toward 155.72, the last confirmed swing low.
– The 154.53 level is also a longer-term support, aligning with the 38.2 percent Fibonacci retracement of the March-to-May rally. A break of this level would mark a stronger corrective shift from the recent uptrend.
4. Broader Technical Picture
– The underlying long-term trend remains bullish, given that the pair clearly holds above the long-term ascending trend line rising from the 2021 and 2022 lows.
– Oscillators such as the RSI and MACD on daily and weekly timeframes remain in bullish territory, though some divergence is emerging on shorter timeframes.
– Weekly candles reflect higher lows, confirming buying interest on dips, although candlestick ranges have narrowed, indicating a potential lull in volatility.
5. Upside Scenario and Bullish Continuation
If favorable market conditions drive the pair higher, several bullish targets are in focus:
– A break above the 158.25 resistance opens the path toward 158.57. This would confirm a renewed short-term rally.
– The next level to watch would be the 160.00 threshold, a level that saw significant volatility and sparked talk of Bank of Japan (BoJ) intervention.
– A daily or weekly close above 160.17 would likely fast-track gains toward 163.00 and potentially 165.00, levels not seen in over three decades.
6. Downside Scenario and Risk of Correction
On the other hand, if the USD/JPY loses momentum, the market should monitor for:
– A daily close below 157.04, triggering increased selling pressure and opening the door to 155.72.
– Further downside could test the March low at 151.85, and breaking this level would shift medium-term bias to neutral or bearish.
– Persistent selling may eventually revisit the 150.00 area, where the BoJ had previously intervened in 2022 to arrest excessive yen depreciation.
7. Fundamental Backdrop and Policy Expectations
The technical outlook for USD/JPY cannot be fully appreciated without considering the
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