#USDJPY @ 137.022 -imp levels: regains positive traction on Friday and is supported by a combination of factors.

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• USD/JPY regains positive traction on Friday and is supported by a combination of factors.
• Hawkish Fed expectations help revive the USD demand and offer support to the major.
• The Fed-BoJ policy divergence and a positive risk tone undermine the safe-haven JPY.
• Traders now eye the US PCE data for some impetus ahead of Fed Chair Powell’s speech.

The pair currently trades last at 137.022.

The previous day high was 137.2 while the previous day low was 136.32. The daily 38.2% Fib levels comes at 136.66, expected to provide support. Similarly, the daily 61.8% fib level is at 136.86, expected to provide support.

The USD/JPY pair attracts fresh buying on Friday and climbs back to the 137.00 mark during the early European session, reversing the previous day’s losses.

The US dollar builds on the overnight bounce from the weekly low and gains some traction on the last day of the week, which, in turn, is seen lending some support to the USD/JPY pair. Firming expectations that the Fed will tighten its policy further to tame inflation continues to underpin the buck. The bets were reaffirmed by upbeat US macro data and hawkish remarks by Fed officials on Thursday.

In fact, St. Louis Fed chief James Bullard stressed the need to keep raising interest rates. Adding to this, Kansas City Fed President Esther George said the Fed hasn’t yet raised rates to levels that weigh on the economy and may have to take them above 4% for a time. Policymakers, however, reserved their judgment on the size of the rate increase at the next FOMC policy meeting in September.

Nevertheless, the markets are still pricing in a greater chance of a supersized 75 bps rate hike. In contrast, the Bank of Japan is expected to retain its ultra-easy policy stance, marking a big divergence in comparison to a more hawkish Fed. This, along with a generally positive tone around the equity markets, undermines the safe-haven Japanese yen and contributes to the USD/JPY pair’s move up.

The fundamental backdrop supports prospects for a further near-term appreciating move. That said, bulls might refrain from placing aggressive bets and prefer to wait for a more hawkish message from Fed Chair Jerome Powell at the Jackson Hole Symposium. Ahead of the key event risk, traders might take cues from the release of the US PCE data, due later during the early North American session.

Technical Levels: Supports and Resistances

USDJPY currently trading at 137.03 at the time of writing. Pair opened at 136.49 and is trading with a change of 0.4 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 134.64, 50 SMA 135.72, 100 SMA @ 132.51 and 200 SMA @ 124.25.

The previous day high was 137.2 while the previous day low was 136.32. The daily 38.2% Fib levels comes at 136.66, expected to provide support. Similarly, the daily 61.8% fib level is at 136.86, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 136.14, 135.79, 135.26
• Pivot resistance is noted at 137.02, 137.55, 137.9

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