USDJPY tests the 200-hour MA as buyers probe higher
The USDJPY is pressing against an important technical ceiling after rebounding from last week’s lows.
On Wednesday and Thursday last week, the pair briefly traded below its 200-day moving average (lower green line on the chart above at 158.33 currently), but sellers could not keep the momentum. Support emerged against the swing level near 157.96, and the failure to break lower gave buyers the opportunity to push the price back toward the shorter-term moving averages.
On Friday, the rebound initially stalled against the 100-hour moving average, but the price has now moved above that level at 158.91 and is testing the 200-hour moving average at 159.12. The current price is trading near 159.17.
That puts buyers in position to make another run higher, but they still need to prove they can maintain momentum above the 200-hour moving average.
A sustained break above 159.12 would shift the short-term bias more firmly in the buyers’ favor. The next target would be the 50% retracement of the decline from the July high at 159.60. That level is reinforced by a swing area extending up to approximately 159.75.
Above that zone, the 100-day moving average at 159.98 would become the next major target. A move through 160.00 would further strengthen the bullish bias and open the door toward 160.63–160.86.
Conversely, if buyers cannot hold above the 200-hour moving average, the price could rotate back toward the 100-hour moving average at 158.91. A break below that level would weaken the rebound and bring the 38.2% retracement at 158.57 and the 200-day moving average at 158.34 back into play.
The broader fundamental backdrop remains a tug-of-war. The dollar is receiving some support from the still-wide U.S.-Japan interest-rate differential and renewed safe-haven demand surrounding increased U.S. sanctions against Iran. USDJPY has consequently recovered above 159.00 after reaching an intraday low near 158.55.
At the same time, upside risks remain tempered by the threat of renewed official intervention. The United States and Japan conducted a rare coordinated yen-buying operation in late July, demonstrating that officials are prepared to respond to another disorderly decline in the Japanese currency. Reuters
For now, the technical roadmap is clear: stay above the 200 hour MA at 159.12 area (and the 100 hour MA at 158.908), and buyers remain in control, with 159.60–159.75 and then the 100-day moving average near 159.98 as the next upside targets. Conversely, fall back below 158.91, and the pair returns to a more bearish technical position with the traders focusing on the 200 day MA next.
This article was written by Greg Michalowski at investinglive.com.