The USD/JPY currency pair inched downwards to trade at 111.70 on Friday as it looked to close the week just below the weekly high of 111.89. The pair traded between 110.88 and 111.90 throughout the week but following USD exhaustion and a lack of positive catalysts to stimulate the bull run, the currency pair was pegged back just below the weekly highs.
USD/JPY Fundamental Analysis
On Friday, the Bank of Japan (BoJ) held monetary policy steady and issued a dovish outlook on exports and output citing increasing overseas risk as a potential hindrance to economic recovery.
The short-term interest rate was maintained at minus 0.1% while a pledge to guide 10-year bond yields at 0% was made. However, with no specific key data to support the greenback early on, the currency pair pulled back from the weekly highs to trade at around the 111.79 level.
USD/JPY Technical Analysis (the 240-min Chart)
From a technical perspective, the 240-min chart indicates that the USD/JPY currency pair’s weekly rally has been halted. It is now strategically poised for both the bulls and the bears to act. The bulls will look to target opportunities at around the weekly high at 111.90, or the key level at 112.00.
On the other hand, the bears will be hoping that the current pullback extends further south towards the 111.500 level, which happens to be a key support level anchored by both the 20-period and 50-period simple moving averages.
USD/JPY Technical Analysis (the Daily Chart)
In the daily chart, the picture of the movement of the USD/JPY currency pair is clearer with a bullish trend emerging that dates back to the beginning of the year. However, in the broader view, that bullish run looks like a major rebound within a slightly bearish channel.
Nonetheless, the bulls will look to maintain control by targeting profits at around the 112.500 level long-term while the bears will be targeting a pullback towards the key level 111.00.
In summary, the USD/JPY currency pair’s bullish case appears to be supported on a technical perspective. However, in the short-term things could be a little different as the greenback remains relatively indifferent with US-China trade talks now postponed to April.