USD/JPY Daily Technical Outlook – Analysis by ActionForex
By ActionForex
The USD/JPY pair remains situated within familiar technical bounds, as momentum indicators suggest prevailing consolidation with a mild bullish bias. As of the latest daily trading session, the pair is hovering around the 157.00 mark, consolidating after recent attempts at reaching new highs. While the broader trend remains bullish, near-term technical signals hint at the persistence of sideways movement unless key resistance or support levels are clearly breached.
Short-Term Technical Overview
– USD/JPY is in consolidation just under recent highs following a robust uptrend that started earlier in the year.
– The pair’s bullish momentum, while still intact, seems to be pausing, as indicated by subdued price action over the past sessions.
– A firm break above resistance at 157.70 would likely rekindle the rally, bringing the prior resistance zone around 160.20 into focus.
– Conversely, failure to break higher, followed by a drop below minor support at 155.70, could initiate a short-term correction towards deeper support levels.
– Currently, the USD/JPY exchange rate is navigating a tight range, denoting a market in need of a clear catalyst for decisive movement.
Key Technical Levels to Watch
Resistance Levels:
– 157.70: This level marks an interim resistance based on recent highs and price congestion zones.
– 160.20: A longer-term resistance established during the peak in multi-decade highs earlier this cycle.
– 162.00: If USD/JPY resumes its upward march, this psychological round number may come into play as part of speculative buying pressure.
Support Levels:
– 155.70: Immediate support that aligns with the recent low and a former resistance-turned-support.
– 153.50: A previous structural resistance zone, now acting as medium-term support.
– 150.80: This level marked a significant breakout during the prior phase of the rally and now operates as foundational support in case of deeper pullbacks.
Momentum Indicators
– Relative Strength Index (RSI): Currently remains slightly above neutral levels, suggesting that the pair has not reached an overbought condition on the daily chart. RSI values around 55 to 60 are consistent with a market coiling ahead of a potential breakout.
– Moving Average Convergence Divergence (MACD): The MACD histogram remains in positive territory, but histogram bars appear to be shrinking, reinforcing the view of price consolidation in the near term.
– Stochastic Oscillator: Entering neutral territory after being previously overbought, which could signal the end of the short-term upward momentum unless renewed buying interest emerges.
Short-Term Price Action Bias
– Intraday price action continues to show signs of stability, with neither buyers nor sellers establishing a clear directional advantage.
– Traders may consider short-term strategies that respectively track resistance zones for potential breakouts or rely on support levels for bounce-back opportunities.
Mid-Term Trend Structure
– The overall structure of USD/JPY remains bullish, backed by a long-term uptrend that has remained uninterrupted since the beginning of 2024.
– Higher highs and higher lows on the daily chart emphasize the pair’s resilience to downside corrections and the continued preference for dollar strength amid macroeconomic conditions.
Broader Market Sentiment and Fundamental Backdrop
The technical picture of USD/JPY must also be viewed in light of macroeconomic events and inter-market dynamics:
– Federal Reserve Policy Expectations:
– Ongoing speculation around potential U.S. interest rate decisions has significantly influenced the dollar’s performance.
– Recent comments from Federal Reserve officials suggest a cautious approach toward rate cuts, reinforcing dollar strength in the medium to long term.
– Bank of Japan (BoJ) Outlook:
– Despite initial steps towards policy normalization, the BoJ continues to maintain ultra-loose monetary policies in comparison to Western peers.
– This ongoing divergence between the Federal Reserve and BoJ policy frameworks bolsters the USD/JPY’s upward trajectory.
Explore this further here: USD/JPY trading.