USD/JPY Targets: Buyers Bolstered by Demand for Safe-Haven Dollar
Market Overview
Despite Japan’s better-than-expected economic growth figures, the yen has encountered resistance due to divided market expectations regarding a potential interest rate hike at the Bank of Japan’s upcoming meeting. Additionally, heightened political turmoil in South Korea has weakened several Asian currencies in Monday’s trading session, prompting a surge in demand for the U.S. dollar as a safe-haven asset. This shift in sentiment has supported a short-term rally in USD/JPY.
Technical Analysis
On the 30-minute USD/JPY chart, the pair is trading decisively above the Bollinger band’s midline, reflecting strong buyer dominance. A confirmed breach of the key resistance level at 150.126 and subsequent price stabilization above this threshold indicate the onset of a bullish phase. Notably, the Bollinger bands are widening, signaling increased market volatility aligned with upward price movement.
The price is approaching its next target at 150.399, a critical resistance aligned with the 161.8% Fibonacci extension. Successfully breaking this level would likely propel the pair towards the upper Bollinger band, targeting 150.567. Conversely, failure to surpass 150.399 could trigger a retracement toward the midline support at 150.126.
Weighted Moving Averages (WMA) of 34 and 100 periods exhibit a pronounced upward slope, reinforcing the strength of the current trend. Additionally, the 34-period WMA has crossed above the 100-period WMA, forming a golden cross—a powerful bullish indicator.
Oscillators Confirmation
Momentum indicators further validate this bullish sentiment. The Relative Strength Index (RSI) is positioned at 64.50, just below overbought territory, underscoring sustained buying pressure. This supports the likelihood of continued upward momentum, provided the upper Bollinger band is breached.
Alternative Scenario
If USD/JPY fails to maintain its position above 150.126 and falls below the Bollinger band’s midline, the bullish trend would face significant challenges. Under such circumstances, the price could retreat toward the key support level at 149.685. In this scenario, the Bollinger bands are expected to narrow, indicating reduced market volatility and potential consolidation.
Key Levels
- Resistance Levels: 150.126, 150.399, 150.567
- Support Levels: 150.126, 149.685
Key Events to Watch
Following the release of Japan’s GDP growth report, market attention is now directed toward the Federal Reserve Bank of New York’s Consumer Inflation Expectations report. However, the focal point of this week’s economic calendar remains the U.S. inflation report due on Wednesday, which could significantly influence USD performance.
Conclusion
USD/JPY is positioned for further gains, with key resistance at 150.399 serving as a critical hurdle. A successful break above this level could pave the way for higher targets, while failure to do so may invite a consolidation or pullback.
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