USDJPY has been trapped between the red Tenkan-sen line and the 20-day simple moving average (SMA) the past couple of sessions, consolidating the bounce off the two-month low of 112.50 within the 113.24 – 113.78 territory.
Traders are probably in a wait-and-see mode ahead of the FOMC policy meeting, with the RSI and the MACD currently reflecting a neutral bias for the market as the former is struggling to enter the bullish zone above 50, while the latter remains muted around its zero and signal lines.
The market trend, however, is still at risk of aversion in the short-term picture. The 20-day SMA is set to cross below the 50-day SMA, signaling a continuation of the latest downfall below the 112.50 low. But for the price to touch that trough, the bears will first need to close below the dashed tentative supportive trendline currently around 113.00.
Should the decline stretch below 112.50, the pair may print a new lower low within the 112.00 – 111.90 region. Note that the one-year-old tentative ascending trendline is also in the neighborhood and failure to pivot here could produce stronger selling pressures, with the price likely tumbling towards the 200-day SMA at 110.74 in the aftermath.
Alternatively, a break above the 113.80 – 114.00 area could open the way towards the 114.45 resistance. Any step higher from here would resume confidence in the bullish trajectory, shifting the spotlight towards the 4½-year high of 115.22 and the 115.50 barrier taken from March 2017. Further up, the rally could accelerate towards the 117.00 mark, where the bulls faced some limitations in early 2017.
Summarizing, despite the latest upside correction, USDJPY is still maintaining a cautious tone in the short-term picture. A move above 113.80 – 114.00 could improve buying sentiment.
