USDJPY broke through the key 160.00 major psychological level and zoomed up to a high of 160.91 before retreating from its rally. The Fibonacci retracement tool shows where more buyers might be waiting to join in the climb.

The 38.2% Fib is close by at 160.40, then the 50% level is closer to the former support at 160.00. The 61.8% level lines up with an ascending trend line that’s been holding since mid-June, and this might be the line in the sand for a short-term bullish pullback.

The 100 SMA is still above the 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. The gap between the indicators is widening to reflect strengthening bullish momentum.

However, stochastic is pointing down to show that bearish pressure is in play, and the oscillator has plenty of room to go before reflecting oversold conditions. This means that the correction could keep going until that happens and the oscillator pulls back up.

Similarly RSI is on the move down, so price could follow suit while sellers have the upper hand. If any of the Fibs hold as support, USDJPY could make its way back to the swing high and beyond.

Dollar strength came strongly in play during the latest trading sessions, owing to a lackluster Treasury auction and a pickup in risk aversion. The lack of action from the Bank of Japan and Ministry of Finance following the break of 160.00 also cleared the way for more gains for USDJPY.

Still, MOF head Suzuki has been jawboning in the past few hours, citing that they are watching FX levels with high urgency and that they are prepared to act if needed. Dollar traders will turn their attention to the US final GDP reading due today and the core PCE price index on Friday.