USDJPY has tiptoed higher following the collapse to a four-month low of 130.55 last Tuesday, with traders currently waiting for a break above the key 133.30 level to increase exposure in the market. The area represents the 50% Fibonacci retracement of the March-October uptrend.
While the latest recovery in momentum indicators endorses the positive action in the market, some caution is required as the RSI is still testing its 50 neutral mark. Moreover, the MACD has yet to enter the positive area, whilst the stochastics are flirting with their 80 overbought level, making a downside reversal likely in the coming sessions.
A rejection at 133.30 could reinforce selling pressure towards the 131.70 bar. Another move lower may immediately stall near the 130.55 low before stretching towards the 129.50 constraining zone, last seen in the second half of 2022.
On the upside, the pair will need a strong bounce above the tough descending trendline and the 136.00 number to regain buying confidence. If the bulls climb that wall, the price may speed up to meet the 200-period simple moving average (SMA) and the 38.2% Fibonacci of 137.70. The extension of the broken bearish channel could also limit bullish actions slightly higher at 138.30.
In summary, USDJPY continues to trade within a caution area despite its latest soft upturn. A step above 133.30 may add fresh bullish impetus to the price, though only a rally above 136.00 would attract fresh buying interest. Â
