USDJPY remains within a narrow range just below psychological 150 barrier, which was cracked earlier this month, but continues to offer solid resistance.
Near-term direction is clouded by mixed signals, as daily studies are in bullish configuration, but overbought and looming intervention keeps traders cautious.
Long tails of candlesticks of past two days point to strong bids, though the upside remains capped for now, while markets seek clearer direction signals.
Recent better than expected US retail sales and unexpected acceleration in job growth, counter expectations of economic slowdown due to high borrowing cost and add to uncertainty, ahead of coming Fed policy meeting on Nov 2.
Fed Chairman Powell, who will be speaking later today, along with other policymakers, still lacks the main information – whether inflation is on track to return to the central bank’s 2% target in estimated timeframe or not.
High uncertainty contributes to the Fed’s mixed view about the interest rates, after the policymakers decided to stay on hold in the last meeting, but left the door open for potential further tightening.
This keeps in play split expectations in which some see that the Fed is done with policy tightening, but others believe that battle with inflation is not over yet and expect more rate hikes, arguing expectations by the facts that economy is quite resilient despite high interest rates.
Geopolitics lately took the centre stage, as fresh conflict in the Middle East threatens to escalate and spill over, adding to growing uncertainty in already fragile situation.
Look for initial direction signals on break of break of Fridays’ spike low at 148.77 (bearish) or lift through 150.00/16 pivots (bullish).
Verification of negative signal would require sustained break of 148.16 (Oct 10 higher low) and confirmation on clear break below 147.29 (Oct 3 spike low).
Conversely, sustained break above 150.00/16 would signal that bulls are regaining traction for acceleration towards 151.94 (multi-decade high, posted on 21 Oct 2022).
Res: 150.00; 150.16; 150.82; 151.23.
Sup: 149.48; 148.77; 148.16; 147.29.