During the early Asian session, USDJPY fell due to broad selling of the dollar, partly influenced by discussions within the Federal Reserve. This drop found support at the 100-hour moving average, allowing for a recovery. In the North American session, the price rose. On the 4-hour chart, significant resistance is near the 38.2% retracement level of 147.135, from the decline since January, just below the weekly high of 147.175. A swing area between 147.01 and 147.338 has consistently acted as a ceiling.

Technical Factors Dominate

If USDJPY breaks above this resistance, it could retest the June high of 148.02, possibly extending to 148.56-148.72. The support at the moving average indicates that buyers are in control and the sentiment is short-term bullish. However, the key question is whether buyers can maintain their momentum above the 38.2% retracement level. To keep this momentum going, buyers need to stay above 147.135. If they fail to break this level, sellers might return, making the near-term outlook more neutral. Currently, we see a classic tug-of-war between short-term buying and broader hesitance around policy signals. The initial dip in USDJPY during the Asian hours, bouncing at the 100-hour moving average, demonstrates that technical factors are driving intraday decisions. It’s more about responding to specific levels rather than firm beliefs. Although the bounce wasn’t strong, it gained enough traction during the North American session to revisit a familiar resistance area. The 38.2% retracement around 147.135 has become a clear battleground. On the price chart, it represents a point where sellers from the January decline might feel encouraged to return.

Market Observations

However, the market action suggests indecision. The highs around 147.175 keep getting tested but fall just short of sustained movement. With resistance holding between approximately 147.01 and 147.338 after several attempts, we’re observing signs of buyer fatigue at these levels. Now, staying above 147.135 is crucial for aiming at the June high of 148.02. The path forward is challenging, as beyond that level, there is a thicker range between 148.56 and 148.72 that has yet to be tested. To reach that, decisive buying is needed, not just reactive spikes. Instead of chasing price strength, we’ve opted to watch for signs of consolidation above key levels. Particularly, the area just below 147.01 hasn’t shown a strong close in recent sessions. Traders taking long positions should be cautious, as price often quickly rejects that area, leaning toward mean reversion strategies if momentum falters. It’s important to watch how positions change if the price moves below the 38.2% level. In that case, renewed selling pressure is likely, as sellers would feel secure re-entering this range. We suggest that shorter-term timeframes, like one-hour charts, may provide clearer signals in the upcoming sessions, especially during pullbacks with decreasing volume. We will keep an eye on attempts to break above resistance. Sustained movement above 147.34 would disrupt this range-bound action and necessitate a reassessment. Until then, the trading environment remains technical, with impulses being optional rather than directional. Create your live VT Markets account and start trading now.

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