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Technical Analysis – USDJPY holds within narrow range in near term

  • USDJPY remains below 157.70

  • Uptrend line acts as strong support

  • Momentum oscillators show contradicting signs

USDJPY is still developing below the 157.70 resistance level and well above the medium-term ascending trend line, failing to have a notable movement after the US CPI data and the Fed decision on Wednesday.

The technical oscillators are showing some mixed signals. The RSI is pointing upwards above the neutral threshold of 50, while the stochastic is heading south, posting a bearish crossover within its %K and %D lines in the overbought area, suggesting an overstretched market.

A successful jump above the 157.70 barrier could open the way for a test of the 159.13 level, which is the 161.8% Fibonacci extension level of the down leg from 151.95 to 140.20. Even higher, the 160.00 round number could be a crucial resistance zone for traders as the market failed to have a closing session above this level, but it recorded a spike towards 160.20.

Alternatively, a drop below the 20-day simple moving average (SMA) could send the pair until the immediate 23.6% Fibonacci retracement level of the upward move from 140.20 to 160.20 at 155.50, which overlaps with the 50-day SMA. Steeper decreases may take the market until the 154.50 and 153.55 levels.

All in all, USDJPY is looking neutral in the near term as it has been moving sideways within 154.50-157.70 over the last month. In the broader outlook the pair is still positive as long as it stands above the uptrend line.  

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