USDJPY geared a bit down after its latest bullish attempt halted at a new 20-year high of 137.76 on Monday.
The good news is that the nearby 136.68 region has immediately switched from resistance to support ahead of the US CPI data due today at 12:30 GMT, buffering downside forces for the second consecutive day. If it stands firm, the price may re-activate its upward trajectory to print a new higher high, likely around 139.15, which is the 261.8% Fibonacci extension of the 131.34 – 126.35 bearish correction. Moving higher, the next obstacle could pop up near 142.00, where the broken support trendline drawn from 121.27 is placed, while beyond that, the way will clear towards the resistance line seen at 147.00.
The bad news is that the momentum indicators are still lacking a clear direction, feeding skepticism about buyers’ dominance. Specifically, the RSI has been oscillating sideways well above its 50 neutral mark since mid-June, while the MACD has barely gained ground over the past week, remaining mostly stable below its red signal line.
Nevertheless, sellers still have some work to do before they claim victory. First, they will need to pierce below the 20-day simple moving average at 135.66 and then close below the 134.26 support zone. If that turns out to be the case, the bearish action could pick up steam towards the tentative ascending trendline at 133.00 and the 50-day SMA at 132.32. Even lower, the decline may initially rest near 128.87 before speeding towards May’s low of 126.35.
Summing up, although upside pressures are currently looking dim, USDJPY could still improve its outlook in the coming sessions if the 136.68 base proves solid.
