USDJPY is currently trading below the critical 160 level with weak momentum. There are signs of overbought conditions, indicating that sellers may be waiting below the 158.35-159.00 range. The possibility of BoJ intervention is also looming, and US core PCE inflation data is scheduled for release on Friday at 12:30 GMT.
After a positive week, USDJPY is now just below its 34-year high of 160.20, surpassing April’s limit of 158.34 and a key resistance line. The price has been meeting resistance around 159.80 in the past few days, and with technical indicators showing overbought signals, the bulls might face challenges ahead. However, as long as the pair holds above the 159.00 level, there is still hope for another upward movement.
A clear break above the 160.20 peak could lead the price towards the 162.75-163.10 region, where important resistance lines are located. This could open the door for further gains towards the 164.00 psychological level or the 161.8% Fibonacci extension around 165.35.
On the other hand, a drop below 159.00 could result in a retest of April’s limit at 158.34. Breaking below this level could shift the short-term outlook from bullish to neutral, potentially leading to a decline towards the 20-day simple moving average at 157.50. Further support levels include the 157.00 trendline zone, the 50-day SMA, and the ascending trendline from May around 156.35.
Overall, USDJPY is in a caution zone, suggesting a possible downside correction. However, a clear downgrade in the outlook would only occur if the price falls below the 158.34-159.00 range.
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