The USDJPY increased on Wednesday to 138.918, but the upward movement was not sustained.

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• USD/JPY ticks higher on Wednesday, through the uptick lacks follow-through.

The pair currently trades last at 138.918.

The previous day high was 139.14 while the previous day low was 137.68. The daily 38.2% Fib levels comes at 138.58, expected to provide support. Similarly, the daily 61.8% fib level is at 138.24, expected to provide support.

The USD/JPY pair edges higher during the Asian session on Wednesday, albeit lacks bullish conviction and currently trades around the 139.00 mark or the top end of a familiar range held over the past week or so.

The underlying bullish sentiment surrounding the global equity markets undermines the safe-haven Japanese Yen (JPY) and turns out to be a key factor lending some support to the USD/JPY pair. Adding to this, the overnight less hawkish remarks by Bank of Japan (BOJ) Governor Kazuo Ueda further weigh on the JPY and remain supportive of the pair’s modest intraday uptick.

Speaking at a news conference after the G20 meeting in India, Ueda noted that there was still some distance to sustainably achieve the 2% inflation target. In response to a question on whether BoJ saw the need to tweak YCC at its meeting in July, Ueda said that unless our assumption on need to sustainably achieve 2% target changes, our narrative on monetary policy won’t change.

The upside for the USD/JPY pair, however, remains limited in the wakeof subdued US Dollar (USD) price action, which, so far, has been struggling to register any meaningful traction from its lowest level since April 2022 touched on Tuesday. The markets have been pricing out the possibility of any further rate hikes by the Federal Reserve (Fed) after the expected 25 bps lift-off in July.

The expectations were reaffirmed by the US CPI report released last week, pointing to a further moderation in consumer inflation and should allow the US central bank to soften its hawkish stance. This has been a key factor behind the recent corrective decline in the US Treasury bond yields, which keeps the USD bulls on the defensive and might cap the upside for the USD/JPY pair.

The aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the recent sharp pullback from the YTD peak – levels just above the 145.00 psychological mark – has run its course. Traders now look to the US housing market data – Building Permits and Housing Starts – for some impetus later during the North American session.

Technical Levels: Supports and Resistances

USDJPY currently trading at 138.89 at the time of writing. Pair opened at 138.84 and is trading with a change of 0.04 % .

The pair is trading below its 20 Daily moving average @ 142.22, below its 50 Daily moving average @ 140.29 , above its 100 Daily moving average @ 137.07 and above its 200 Daily moving average @ 137.02

The previous day high was 139.14 while the previous day low was 137.68. The daily 38.2% Fib levels comes at 138.58, expected to provide support. Similarly, the daily 61.8% fib level is at 138.24, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 137.97, 137.1, 136.52
• Pivot resistance is noted at 139.42, 140.0, 140.87

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