USDJPY @ 134.494 – Support/Resistance analysis: steadily climbs to multi-day peak, further beyond mid-134.00s

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USDJPY @ 134.494 – Support/Resistance analysis: steadily climbs to multi-day peak, further beyond mid-134.00s

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• USD/JPY gains strong positive traction on Tuesday and is supported by a combination of factors.
• Hawkish Fed expectations, rising US bond yields continue to underpin the USD and act as a tailwind.
• The Fed-BoJ policy divergence weighs on the JPY, though recession fears could limit deeper losses.
• Investors might also prefer to wait for the release of the key FOMC meeting minutes on Wednesday.

The pair currently trades last at 134.494.

The previous day high was 133.6 while the previous day low was 132.56. The daily 38.2% Fib levels comes at 132.95, expected to provide support. Similarly, the daily 61.8% fib level is at 133.2, expected to provide support.

The USD/JPY pair builds on its intraday positive move and climbs to the 134.65-134.70 area, or a four-day high during the early North American session.

The US dollar is prolonging its recovery from over a one-month low touched in the aftermath of the softer US CPI report and gaining traction for the third successive day on Tuesday. The momentum pushes the buck to a fresh monthly peak and acts as a tailwind for the USD/JPY pair.

The recent hawkish remarks by several Fed officials suggest that the US central bank would stick to its policy tightening path. This, along with a pickup in the US Treasury bond yields, continues to underpin the USD and remain supportive of the USD/JPY pair’s strong move up.

Apart from this, a big divergence in the Fed-Bank of Japan (BoJ) monetary policy stance is driving flows away from the Japanese yen and providing an additional lift to spot prices. It is worth recalling that the BoJ has repeatedly said that it would retain its ultra-easy policy settings.

That said, the prevalent cautious market mood – amid growing worries about a global economic downturn – extends some support to the safe-haven JPY. This might turn out to be the only factor that might hold back bulls from placing fresh bets and cap any further gains for the USD/JPY pair.

Traders might also prefer to move on the sidelines ahead of the FOMC minutes, scheduled for release on Wednesday. Investors would look for clues about the possibility of a 75 bps rate hike in September, which would influence the USD and provide a fresh directional impetus to the USD/JPY pair.

Technical Levels: Supports and Resistances

USDJPY currently trading at 134.48 at the time of writing. Pair opened at 133.32 and is trading with a change of 0.87 % .

The pair is trading below its 20 Daily moving average @ 134.84, below its 50 Daily moving average @ 135.35 , above its 100 Daily moving average @ 131.45 and above its 200 Daily moving average @ 123.36

The previous day high was 133.6 while the previous day low was 132.56. The daily 38.2% Fib levels comes at 132.95, expected to provide support. Similarly, the daily 61.8% fib level is at 133.2, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 132.71, 132.11, 131.67
• Pivot resistance is noted at 133.76, 134.2, 134.8

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