HomeContributorsTechnical AnalysisUSDJPY Edges Higher, Very Close to its 2023 High

USDJPY Edges Higher, Very Close to its 2023 High

  • USDJPY bulls remain in control despite intervention rumours
  • Momentum indicators are not supportive of the bulls’ intentions
  • Could the bears stage a move towards the 144.99 area?

USDJPY remains a tad below its 2023 high as the bullish pressure continues unabated. The market appears to be testing the Japanese Finance Ministry’s nerves. In the meantime, the momentum indicators are mixed. Specifically, the Average Directional Movement Index (ADX) is pointing to a very muted and weak bullish trend. More importantly, the stochastic oscillator continues to hover in its overbought (OB) territory but appears ready to move lower.

If the stochastic drops aggressively below its OB level, building a good gap from its moving average, the bears could attempt a pullback. They could try to push USDJPY below the 78.6% Fibonacci retracement of October 21, 2023 – January 16, 2023 downtrend at 146.65, and towards the September 7, 2022 high at 144.99 and the lower boundary of the upward sloping trend channel respectively.  Even lower, the 50-day simple moving average (SMA) at 143.66 and the 61.8% Fibonacci retracement at 142.49 could test the real strength of the downleg.

On the flip side, the bulls are probably keen on keeping USDJPY at the current elevated levels, potentially risking a potent reaction from the Japanese authorities. Should they manage to overcome the 147.71 level, the path appears to be unhindered until the October 21, 2022 high at 151.94.

To sum up, the USDJPY bulls remain in control, but the stochastic oscillator could give the bears the necessary excuse to stage a short-term pullback with 144.99 being the main target level.

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