Title: USD/JPY Technical Analysis: Powell’s Comments Take Center Stage
Source: Original article by Justin Low, ForexLive via TradingView
Link: https://www.tradingview.com/news/forexlive:00cf44ee0094b:0-usdjpy-technical-analysis-the-focus-turns-to-fed-chair-powell/
As the USD/JPY pair continues to find its footing within a key technical range, market participants are paying close attention to upcoming Federal Reserve commentary. After drifting higher in recent sessions, the currency pair finds itself hovering just below its recent highs, as broader market sentiment remains cautious ahead of critical macroeconomic insights. In particular, traders are now awaiting insight from Federal Reserve Chair Jerome Powell, whose statements could serve as a key directional driver for the US dollar and USD/JPY pair.
Key Developments in USD/JPY Price Action:
– USD/JPY is currently holding near short-term highs and maintaining a position just under the 158.00 threshold.
– Despite the slight gains, there is hesitation among traders to push the pair above key resistance levels without clearer signals from the US Federal Reserve.
– The price action reflects a broader consolidation phase, with markets gauging the outlook for interest rates and policy tightening.
Market participants have become increasingly cautious in interpreting economic data, with geopolitical tensions and central bank policy providing mixed signals. In that context, this week’s focus has turned sharply towards Jerome Powell’s upcoming comments, which may offer greater insight into the Federal Reserve’s policy path through the second half of the year.
Technical Overview of USD/JPY
From a technical perspective, the USD/JPY pair remains firmly in a bullish trend despite recent consolidation. The underlying momentum has shown signs of resilience even in the face of choppy market conditions. While price action has stalled temporarily, key technical indicators suggest further upside risk remains intact if certain levels are breached.
Key Technical Levels to Watch:
– Resistance Levels:
– Initial resistance sits around 158.00, a psychological and technical barrier that has capped gains in recent sessions.
– A break above 158.00 could lead to a retest of the 2024 high near 160.20. This was the point reached in April and May before authorities hinted at intervention.
– Beyond 160.20, resistance is less clear, but a break would open the door to broader yen weakening and potentially unchecked USD strength.
– Support Levels:
– Initial support is located around 157.00, which has held as a short-term base over the past few trading sessions.
– A move below that could open the door toward more substantial support in the 155.80 – 156.00 zone, where former resistance turned into a support platform in late May.
– The 100-day moving average around 155.00 may act as a longer-term floor if bearish pressure increases.
Momentum Indicators:
– Relative Strength Index (RSI): Currently near neutral, signaling a lack of immediate overbought or oversold conditions. This suggests the pair could move flexibly in either direction depending on incoming economic data.
– Moving Averages: The 20-day and 50-day moving averages continue to trend upward, reinforcing a near-term bullish bias. Price action remains above both averages, confirming upward momentum is still in place.
– Volume Profile: Trading volume has been moderate, with no signs of panic buying or selling. This is consistent with a wait-and-see sentiment leading into upcoming Fed speeches.
Fundamental Context Driving USD/JPY Sentiment
With the pair hovering near multi-month highs, fundamentals have played a powerful role in supporting price levels. The US dollar has remained resilient due to slowing inflation momentum and strong economic data, increasing bets that the Federal Reserve may delay any rate cuts until later in 2024. However, recent mixed signals in labor market data and CPI readings have injected uncertainty into the rate outlook.
Drivers Supporting the USD:
– Strong economic data: US GDP growth remains steady, while
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