USD/JPY adds strength to the weekly gains as bulls flirt with the intraday high of around 128.80 during early Friday. In doing so, the Yen pair stays inside a one-week-old symmetrical triangle while extending the bounce off the lowest levels since late May 2022.

A rising trend has been recorded in Japan’s inflation, which bolsters the case of exiting from the decade-long ultra-loose monetary policy by the Bank of Japan (BoJ). The US Dollar Index (DXY) dropped to near 101.60 but could find support as the hawkish commentary from New York Fed Bank President John Williams could trigger uncertainty.

That said, the gradually firming RSI (14) line, not overbought, joins the bullish MACD signals to underpin the hopes of the quote’s further advances.

As a result, the USD/JPY buyers are up for challenging the 129.00 round figure. However, the early-January swing low near 129.50 and the 130.00 psychological magnet could challenge the quote’s further upside.

In a case where the USD/JPY prices rally beyond 130.00, the 100-Exponential Moving Average (EMA) and the upper line of the stated triangle, respectively around 130.70 and 131.10, could probe the bulls.

Also acting as a strong upside challenge for the pair is the downward-sloping resistance line from mid-December 2022 and the 200-EMA, respectively near 132.65 and 132.85.

On the flip side, an ascending trend line from Monday, close to 127.85, restricts immediate USD/JPY declines before the monthly low of 127.21.

It’s worth observing that the lows marked during late May 2022 near 126.35 could act as the last defense of the USD/JPY buyers.

Overall, USD/JPY is likely to consolidate the latest losses but the upside room appears limited.

Limited Upside Move Expected on USDJPY Before Further Fall

Jan 20 2023