USDJPY has staged strong gains in the past few days yet it appears to be stalling at a major resistance zone. Price is moving around the 105.50 area, which lines up with the previous year highs and a long-term support zone broken in the past years. This also lines up with the 61.8% Fibonacci retracement level on the latest downtrend.
This resistance could keep further rallies in check, which might push USDJPY back down to the near-term support at the 101.00 consolidation support or lower to the 97.50 area of interest. In that case, the longer-term downtrend could be set, and eventually see USDJPY much lower.
On the other hand, a strong upside break from this area of interest could push price up to the next resistance zone at 113.00. Further gains could lead USDJPY to rally all the way up to the swing high at the 124.00 level.
Much could hinge on the BOJ’s monetary policy stance and the upcoming NFP release, which might set the tone for Fed policy guidance. Recall that BOJ Governor Kuroda expressed openness for further easing should the Japanese economy weaken while Fed Chair Yellen said that they could tighten sooner if consistent labor improvements are seen.
By Kate Curtis from Trader’s Way