The USD/JPY Trading Higher
The USD/JPY currency pair is currently experiencing a bullish trend, driven by robust demand for the US dollar against the Japanese yen. The break past the crucial resistance level of 130.00 has established this level as a new support, providing stability to the pair’s value. This trend has encouraged investors to increase their positions, boosting the pair’s upward momentum.
Technical indicators, such as the MACD or the Moving Average Convergence Divergence and the RSI (Relative Strength Index), provide bullish signals, indicating that the pair’s value will continue to rise. According to FXstreet analysts, these positive indicators give buyers confidence in their investments, keeping them optimistic about future gains in the value of the USD/JPY currency pair.
Technical Analysis of USD/JPY
Despite the current bullish trend of the USD/JPY currency pair, it may face challenges from two key resistance levels. At 132.70 and 134.80, these levels, represented by the 50-day moving average and the previous monthly peak, could hinder the further upward movement of the pair.
However, if USD/JPY can overcome the resistance at 134.80, it could signify a change in the trend and trigger even greater gains in the currency pair’s value. These gains would be significant and likely attract increased investor attention, leading to more buying activity and further driving up the pair’s value.
While the USD/JPY currency pair may face resistance levels in its upward trend, it also has support at the key level of 130.00, previously a resistance point. If the pair’s value were to decline, the next level of support could be found at 128.20, with an upward trend from mid-January.
This trend line acts as another potential barrier for downward movement, providing support for the pair’s value in the event of a decline. Therefore, market participants will closely monitor this level, as a breach could indicate a shift in the trend and a decline in the pair’s value.
However, if the downward trend were to persist, the USD/JPY would encounter different support levels at 128.20 and 127.20. If these levels were to be breached, the market could test the May 2022 low of 126.35.
In the event of a persistent downward trend, the next significant level of support would be the round figure of 120.00. This level has historically acted as a significant support for the currency pair and could provide a barrier for further losses in the event of a prolonged downward trend.
While USD/JPY is expected to maintain its upward trend, breaking past the 50-day moving average resistance is crucial for this to occur. Market participants will closely monitor this key level, as a breakthrough could trigger further gains in the currency pair’s value. At the same time, a failure to overcome the resistance could indicate a change in the trend and a potential decline in the pair’s value.
It is also worth noting that the USD/JPY currency pair is highly traded in the foreign exchange market, making it among the most liquid currency pairs. This high liquidity allows traders to enter and exit trades quickly and at a favorable price. However, the high liquidity also means that the market can be highly volatile, and traders should be prepared for sudden changes in the pair’s value.