- USD/JPY is in an overbought condition, but the BoJ’s dovish stance would keep the yen weak.
- A clear break of 145.00 would send the pair higher towards 147.67 in August 1998.
The USD/JPY rallied after the US Department of Labor reported that inflation was slowing but beating estimates, surprising USD/JPY traders who had been expecting a lower reading. At the time of writing, USD/JPY is trading at 144.43, up 1.09%.
USD/JPY Price Analysis: Technical Outlook
After the US inflation report hit the news, USD/JPY surged towards daily highs at 144.68. It is worth noting that, although with a bullish bias, the Relative Strength Index (RSI), along with the price action, shows signs that the USD/JPY is overbought. However, the Bank of Japan’s dovish stance is likely to put pressure on the Japanese yen, opening the door to the August 1998 test at 147.67.
In the short term, the USD/JPY one hour scale shows the major test of the daily high of September 8 at 144.44. A clear break would expose the daily high of September 7 at 144.56, followed by the high of the year at 144.99. On the other hand, the first support of the USD/JPY would be the figure of 144.00. Once broken, the next support would be the R1 daily pivot at 143.50, followed by the 100 and 20 EMAs around 143.18 – 143.05, respectively. A break of the latter would expose the daily pivot at 142.81.
Key USD/JPY Technical Levels
Source: Fx Street
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