USDJPY hit important 160 resistance but stays below this level for the second consecutive day, as traders remain very cautious after the previous intervention commenced at this zone and Japan’s officials repeated today their readiness to intervene again.
The notion is supported by today’s comments from BoJ’s Governor who highlighted an increased inflationary risk from the energy shock sparked by the war in the Middle East that boosts expectation for a rate hike in central bank’s June policy meeting.
Initial signals of potential stall of larger rally are developing on daily chart (overbought stochastic / 14-d momentum bearish divergence) and contribute to scenario of 160 zone capping the rally from 155.02 (May 6 low), as today’s action was so far shaped in Hanging Man candle that also marks an initial reversal signal.
On the other hand, today’s dips were contained by the first support (daily Tenkan-sen at 155.38) and near-term action is expected to keep bullish bias while holding above daily cloud (top at 159.03), but cloud starts to thin from tomorrow and will twist next week that could attract fresh bears.
Look for initial negative signal on violation of daily Tenkan-sen, which would be boosted on price drop into daily cloud.
On the upside, violation of 160 barrier cannot be ruled out, though upticks are likely to be limited (like on previous attempts in Mar / Apr) on persistent intervention threats.
Res: 160.00; 160.45; 160.72; 161.00
Sup: 159.38; 159.00; 158.54; 157.87
