USD/JPY increased in the first part of the day as the USDX and Nikkei stock index has managed to climb much higher, but failed to stay near 113.18 today’s high and above the 113.05 yesterday’s high. Price shows exhaustion signs, even if the Yen is somehow expected to drop after the Nikkei’s impressive rally.

The currency pair could decrease a little in the upcoming days, but only to recapture more directional energy before will climb much higher. It looks too overbought to continue the upside movement at this moment.

Price decreased and erased the morning gains as the USDX failed to stay above the 93.81 horizontal resistance. The dollar index shows some exhaustion signs as well on the short term, only a valid breakout above the 93.81 level will confirm a further increase and a USD dominance, while a decrease will send the greenback lower versus all its rivals.

The Yen was supported by the Japanese Consumer Confidence, which increased from 43.3 to 43.9 points, while the BOJ Core CPI rose by 0.6%, exceeding the 0.4% growth in the former reading period. Moreover, the Monetary Base increased only by 15.6%, but less versus the 17.2% estimate and versus the 16.3% growth in the former reading period.

The United States is to release the Total Vehicle Sales indicator and is expected to increase from 16.1M to 16.9M, remains to see what impact will have.

Price retested the warning line (wl1) and closed much below this obstacle signaling that we may have a minor drop. Price has increased since Friday, but is far from the warning line (wl1), has failed to reach the 113.25, signaling an overbought.

Technically, it was expected to increase further and to reach at least the 23.6% retracement level after the breakout above the WL3, but it could come down to retest a support level before will climb much higher.

Price continues to move in range on the daily chart, but a failure to reach the 23.6% retracement level will signal a major drop.