Summary
- Resistance Levels:
- The pair is hovering near the 145.00 resistance zone. A decisive break above this psychological level could ignite a bullish extension toward 148.20 and, ultimately, 150.98 — levels not seen since late 2022.
- Support Levels:
- Immediate support lies at 143.85. A downside break here may expose the pair to 142.50 and potentially deeper toward 141.15, the lower boundary of the recent trend channel.
- Momentum Indicators:
- The Stochastic Oscillator signals overbought conditions, suggesting short-term exhaustion in bullish momentum. This hints at the possibility of a pullback or consolidation before another leg higher.
Fundamental Drivers
- U.S. Economic Resilience:
- The dollar continues to find support from upbeat U.S. data — firm consumer confidence and robust labor market signals. These bolster expectations that the Federal Reserve may delay rate cuts, further supporting USD.
- Japanese Fiscal Concerns:
- Japan is grappling with bond market volatility. Weak demand in government bond auctions and speculation over reducing super-long bond issuance has stoked fears of fiscal instability. Rising domestic yields may pressure the Bank of Japan to recalibrate policy, but the divergence from Fed policy still favors the USD.
Short-Term Outlook
The USDJPY pair is at a critical juncture:
- A break above 145.00 could be a technical green light for further upside, fueled by policy divergence and strong U.S. data.
- However, overbought signals and risk-off flows could prompt a pullback to 143.85 or below.
Upcoming Events:
- U.S. PCE inflation data and labor reports
- Comments from BOJ officials on bond issuance and yield management
- Geopolitical or risk-off headlines impacting yen safe-haven flows
USDJPY – H4 Timeframe
On the 4-hour timeframe, the USDJPY price action chart shows an initial rejection off the demand zone at the origin of the bullish break of structure. The expected course of action is for price to retrace into the demand zone at the base of the ongoing bullish impulse.
Analyst's Expectations:
Direction: Bullish
Target- 145.364
Invalidation- 142.104
CONCLUSION
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