USDJPY is flying towards a fresh 20-year high around 133.30, continuing the strong buying interest that started after the bounce off the 126.30 barrier. The 20- and 40-day simple moving averages (SMAs) failed to post a bearish crossover, changing their direction to the upside. The RSI indicator entered the overbought region, while the MACD is extending its bullish movement above its trigger and zero lines.
Traders would be more willing to continue the bullish rally and if there is a closing day above the 133.00 round number then the next stop might be somewhere between the 135.15 barrier, which was registered in February 2002, and the 146.80 resistance.
On the other hand, the selling pressure could increase if the market declines below the short-term SMAs at 128.80. This would bring the 23.6% Fibonacci retracement level of the up leg from 113.40 to 133.30 into the spotlight, which, if violated, could trigger sharper losses probably toward the 126.30 barrier.
To summarize, if the price breaks over today’s peak, there is a good chance that USDJPY will show additional signs of improvement. On the other hand, a drop below the short-term SMAs may switch the outlook to neutral.
