Despite stalling near the 109.00 major psychological resistance level for days, the uptrend on USDJPY remains very much intact. Price might need a correction for now though, as the rally appears overdone.
MACD is moving down, indicating that selling pressure is mounting. Similarly, stochastic is pointing lower, which means that sellers could take control of price action from here. However, the potential selloff might not last as price could eventually find support at the 106.00-107.00 levels, which line up with an area of interest and the 100 simple moving average.
A deeper correction could last until the 105.00 major psychological level, which is near the 200 SMA. A break below this area could be a signal that the uptrend is over and that a reversal may take place sooner or later.
USDJPY Forex Outlook
On the other hand, an upside break past the current consolidation or the 109.00 handle could signify that bulls are ready to charge once more and possibly push USDJPY to the 110.00 major psychological level or higher. Risk aversion appears to be favoring the US dollar at the moment, as data from the US has been much stronger compared to Japan’s and the BOJ is staying open to the idea of further easing.
USDJPY event risks include the release of the US durable goods orders report today, which could see a 17.7% decline in the headline figure and a 0.7% increase for the core version of the report. Stronger than expected data could confirm that the US economy is still doing well and trigger an upside break for this forex pair. However, weak figures could lead to a larger market correction, possibly until the simple moving averages.
Overall, the strong uptrend remains very much intact and the path of least resistance for this pair is still to the upside, as the policy differences between the Fed and BOJ could keep USDJPY rallying.
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