The USD/JPY is recording solid gains during the North American session, amidst light liquidity trading conditions, due to Wall Street being closed in observance of the US Labor day. The USD/JPY is trading at 140.53, at the time of writing, after refreshing 24-year highs on Friday at 140.80.

From a weekly chart perspective, the USD/JPY is still upward biased, but overbought conditions begin to be present. After refreshing YTD highs during May, July, and September, peaking at 131.34, 139.38, and 140.80, respectively, the Relative Strength Index (RSI) reached 88, 84, and 72. Hence, buying pressure might be easing due to traders refraining from opening fresh longs, alongside profit taking.

The USD/JPY daily chart portrays the pair breaking above the rising-wedge trendline, invalidating the bearish bias of the pattern. However, USD/JPY Friday’s price action formed a doji, meaning buyers and sellers in balance, spurred by rumors of Japanese authorities intervening in the Forex Market due to the perceived yen weakness. Therefore, the major might consolidate in the 139.00-140.00 range.

The USD/JPY first resistance would be YTD high at 140.80. Break above will expose the 141.00 psychological level before testing 24-year highs at 147.67. On the flip side, the USD/JPY first support would be the 140.00 mark. Once cleared, the next support would be the September 1 daily low at 138.83, followed by the 138.00 mark.

Nevertheless, the fundamental backdrop remains tilted firmly in favour of bullish traders. This, in turn, suggests that any meaningful pullback could be seen as a buying opportunity and is more likely to remain limited.

USDJPY Targeting 140.80 - 141.0 Before Beairsh Recovery

Sep 05 2022