The USDJPY currency pair has seen a remarkable streak of six consecutive weeks of gains, trading 1.33% higher week-to-date and poised for a seventh positive week.
The Japanese Yen weakened during the Asian session after the Bank of Japan (BOJ) maintained its accommodative monetary policy stance, with rates at 0.1%. Despite this, estimates suggest inflation will remain near its 2% target for the next three years.
Attention now turns to March’s core PCE price index data, the Fed’s preferred inflation gauge, for insights into the U.S. interest rate prospects. Recent data, including the U.S. GDP Price Index surpassing expectations at 3.1%, hints at potential inflationary pressures. Traders await the PCE Price Index reading to gauge its impact on monetary policy decisions, underscoring its significance in shaping market sentiment and currency movements.
Technical
The USDJPY currency pair has been experiencing an uptrend, maintaining its position above the 100-day moving average, indicating bullish momentum.
After a minor dip, support was established at the 153.591 level, prompting buyers to push the pair to a fresh all-time high. However, the all-time high at the 156.820 level now acts as a resistance level, causing downside pressures and leading to a retracement amid overbought RSI conditions.
Interestingly, the 50% Fibonacci retracement level served as an intermediate support during the retracement, triggering a bullish reversal as buyers reemerged in the market. This suggests that buyers are still active and willing to push the price higher. Consequently, if upside momentum persists, a retest of the 156.820 resistance level is likely. On the other hand, if downside pressures resurface, the 50% Fibonacci retracement level could be retested as support, indicating a potential reversal in the trend.
Summary
The USDJPY surged to a new all-time high, reflecting sustained bullish momentum supported by accommodative BoJ policies and robust U.S. economic data. While facing resistance at 156.820, a bullish reversal from the 50% Fibonacci retracement level suggests the potential for further gains if buyers remain active, shaping the currency’s outlook.
Sources: U.S. Bureau of Economic Analysis, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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