USD/JPY ran out of steam near February’s bar of 133.00 for the second time, despite Monday’s notable rebound.
The 50-day simple moving average (SMA) is another struggle for the bulls slightly lower at 132.00, though there is a ray of hope that upside pressures may resume. Specifically, the upturn in the 20-day SMA is reflecting an improvement in short-term buying appetite, although a bullish cross with the 50-day SMA is still not in sight.
In momentum indicators, the MACD has been running northwards above its red signal line over the past three weeks, currently set to jump into the positive area. Meanwhile, the RSI keeps moving sideways marginally above its 50 neutral mark, though as long as it hovers above that threshold, upside movements are more likely than downside ones.
Nevertheless, buyers will remain patient until the pair clearly pierces through the 132.00-133.00 wall and the constraining falling line from mid-October. The 23.6% Fibonacci retracement of the 151.93-127.21 downleg is cementing that ceiling too. If that bullish scenario materializes, the pair may advance towards December’s restrictive zone of 134.45, a break of which could stage an exciting rally towards the flattening 200-day SMA and the 38.2% Fibonacci level of 136.65.
Alternatively, another close below the 50-day SMA may retest the 131.00 base and the 20-day SMA, which is currently located around August’s low of 130.38. Failure to rebound here and an extension below the 129.70-129.20 area could activate fresh selling towards the channel’s upper boundary at 128.00. Then, if January’s trough of 127.21 cracks too, the bears may chart a new lower low around 126.00.
In summary, USDJPY seems to have the support from buyers, but some caution is preserved as the pair remains capped below the 133.00 bar.
Note that US CPI inflation will be out today at 12:30 GMT.