The USD/JPY currency pair on Thursday bounced off the key support level at about 134.990 to trade at 136.256. The currency pair continues to trade within an ascending channel formation in the 60-min chart.
The pair has now rallied to trade several levels above the 100-hour moving average line. As a result, the currency pair has now advanced deep into the overbought conditions of the 14-hour RSI.
USD/JPY Fundamentals Overview
From a fundamental perspective, the USD/JPY currency pair is trading at the back of a relatively busy period in both markets. The greenback traded higher on Thursday after investors interpreted Thursday’s FOMC minutes as an indication that the Federal Reserve is not done with rate hikes yet.
The announcement came at the back of promising claim data, with last week’s initial jobless claims of 250k, substantially lower than the forecast of 265k. Continuing claims for the preceding week also beat 1.438 million with 1.437 million. Earlier in the week, the retail sales control group also came in better than expected although general retail sales missed estimates.
In Japan, the National Consumer Price Index for July beat the expected (YoY) change of 2.2% with a change of 2.6%. On the other hand, CPI ex-food and energy outperformed 0.6% with 1.2% (YoY), while CPI ex-fresh food was in line with 2.4%. Earlier in the week, Japan’s exports and imports also beat 18.2% and 45.7%, respectively, with 19% and 47.2% (YoY), while Merchandise Trade Balance for the month missed expectations.
USD/JPY Technical Analysis (the 60-min Chart)
Technically, the USD/JPY currency pair seems to be trading within an ascending channel formation in the 60-min chart. This indicates a significant short-term bullish bias in the market sentiment.
Therefore, the bulls will be looking to ride the current wave of gains toward 136.845 or higher to 137.457. On the other hand, the bears will be looking to pounce for profits at about 135.697 or lower at 134.993.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the USD/JPY currency pair seems to have recently completed an upward breakout from a descending channel formation. This indicates an abrupt change in the market sentiment from bearish to bullish.
Therefore, the bull will be looking to extend the current spike toward 139.473 or higher to 142.507. On the other hand, the bears will be targeting long-term profits at about 133.268, or lower at 130.234.