- USD/JPY recovers over 200 pips from a multi-week low and climbs back closer to the daily high.
- A solid intraday USD bounce turns out to be a key factor behind the strong intraday move up.
- The lack of follow-through buying beyond the 50-day SMA warrants caution for bullish traders.
The USD/JPY pair is prolonging its solid intraday recovery from the 132.50 area and continues scaling higher through the early North American session. Spot prices recover over 200 pips from a six-week low touched earlier this Friday and move back to mid-134.00s, closer to the daily high in the last hour.
From a technical perspective, the post-FOMC steep decline stalls near support marked by an ascending trend-line extending from the April monthly swing low. Bulls, however, struggle to capitalize on the move beyond the 50-day SMA support breakpoint, warranting caution before positioning for any further gains.
Furthermore, oscillators on the daily chart, meanwhile, have just started drifting into negative territory. This further makes it prudent to wait for some follow-through buying before confirming that the USD/JPY pair has formed a bottom and the corrective fall from a 24-year peak has run its course.
In the meantime, any subsequent move up is likely to confront stiff resistance and remain capped near the 135.00 psychological mark. Sustained strength beyond could trigger a fresh bout of a short-covering move and lift the USD/JPY pair towards the next relevant resistance, just ahead of the 136.00 mark.
On the flip side, weakness back below the 134.00 round figure now seems to find decent support near the mid-133.00s. Failure to defend the said area would make the USD/JPY pair vulnerable to weaken back below the 133.00 mark and aim back to challenging the daily swing low, around mid-132.00s.
Some follow-through selling would mark a fresh bearish breakdown through the aforementioned ascending trend-line support and pave the way for a further near-term depreciating move for the USD/JPY pair.
USD/JPY daily chart
Key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remains cautious below 0.6300
AUD/USD reversed three consecutive days of gains and briefly pierced the 0.6200 support despite the offered stance in the greenback and the positive labour market report in Australia in December.
EUR/USD strung along 1.0300 ahead of thin Friday docket
EUR/USD middled through Thursday’s market action with bids hung up on the 1.0300 price handle. There’s a limited offering from the economic data docket on Friday, and traders will be keeping an ear to the ground for any rumblings from central bank policymakers.
Gold on its way to test record highs
Prices of Gold advances further and manage to reclaim the key $2,700 mark per ounce troy on Thursday in response to the absence of traction in the US Dollar and diminishing US yields across the board.
Staking could spark Ethereum rally in 2025 as PostFinance launch stirs bullish sentiment
Ethereum experienced a 3% decline on Thursday despite growing excitement over the launch of ETH staking services by PostFinance AG. Investors are optimistic that this development may lead to the approval of staking in Ethereum ETFs.
Eurozone industrial production ticked up in November
The slight 0.2% rise in production from October is insufficient to indicate a reversal of the two-year downward trend. Overall, the outlook for industry remains quite weak at the start of the year.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.