Holds steady above 100-hour SMA, around mid-110.00s

  • USD/JPY found a decent support near 100-hour SMA and stalled the overnight retracement slide.
  • The technical set-up favours bullish traders and supports prospects for additional near-term gains.
  • Dips might be seen as a buying opportunity and remain limited near 110.00, or weekly swing lows.

The USD/JPY pair extended its sideways consolidative price action heading into the North American session and remained confined in a narrow trading band, just below mid-110.00s.

A combination of diverging forces failed to provide any meaningful impetus to the USD/JPY pair and led to a subdued/range-bound price action on Thursday. The underlying bullish sentiment around the equity markets, despite persistent COVID-19 woes, undermined the safe-haven Japanese yen.

That said, the repricing of the likely timing for policy tightening by the Fed, along with a softer tone around the US Treasury bond yields held the US dollar bulls from placing aggressive bets. This, in turn, was seen as a key factor that capped the upside for the USD/JPY pair.

From a technical perspective, the USD/JPY pair attracted some buying near 100-hour SMA and for now, seems to have stalled the overnight retracement slide from over one month tops. However, the lack of any follow-through buying warrants some caution before positioning for any further gains.

Meanwhile, oscillators on 4-hour/daily charts are holding comfortably in the positive territory and favour bullish traders. Hence, any subsequent decline might be seen as a buying opportunity near the 110.25-20 region and remain limited near the key 110.00 psychological mark.

A convincing break below will negate the positive outlook and prompt some aggressive technical selling. The USD/JPY pair might then accelerate the corrective slide towards the next relevant support near the 109.65-60 region before eventually dropping to the 109.00 round figure.

On the flip side, sustained strength beyond the 110.50-55 region could push the USD/JPY pair back towards the overnight swing highs, around the 110.80 region. This is closely followed by the 111.00 mark, above which bulls might aim to challenge YTD tops, around the 111.65 region.

USD/JPY 1-hour chart


Technical levels to watch


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