- USD/JPY recovery fueled by positive sentiment around US debt ceiling talks, strong US jobs data and encouraging retail and industry numbers.
- Despite breaking through the 138.00 resistance, possible resistance levels at 139.00 and 139.89 could limit gains, with the key psychological level of 140.00 as the next target.
- Although signs of overbought conditions are emerging, suggesting the possibility of a downward correction, the overall uptrend remains strong.
He USD/JPY Hits new year-to-date highs at 138.67, driven by rising US Treasury yields amid upbeat sentiment buoyed by improving US debt ceiling talks In addition, strong US jobs data, along with strong retail sales, industrial production, and a surprisingly hawkish comment from Dallas Fed President Lorie Logan, buoyed the USD. /JPY. At the time of writing, USD/JPY is trading at 138.57 after hitting a low of 137.28.
USD/JPY Price Analysis: Technical Perspective
The USD/JPY daily chart shows that the pair remains in a solid uptrend after breaking a trend line of resistance near the 138.00 area. To the upside, USD/JPY will hit solid resistance levels as the 139.00 figure, followed by the daily high on November 30 at 139.89. A decisive break will expose the psychological figure of 140.00. On the other hand, if USD/JPY falls below 138.00, it will exacerbate a correction towards the 20-day EMA at 135.52.
In the near term, on the USD/JPY 1 hour chart, the pair topped out around the R2 daily pivot, with two subsequent attempts to break above the latter, as buyers keep an eye on the 139.00 figure. If USD/JPY fails to break above the R2 daily pivot level, a retracement towards the R1 pivot is expected at 138.15 before reaching the 20-EMA at 137.98.
The Relative Strength Index (RSI) indicator is in overbought territory posting lower peaks as price action reaches higher highs. This means that a negative divergence forms, which opens the door for a bearish correction. Also, the 3-period exchange rate shows that buyers are losing momentum.
USD/JPY Price Action – 1 Hour Chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
