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Analysis of the USD/JPY Price: It Consolidates Near The 149.00s, And Bullish Potential Appears To Be Intact
USD/JPY oscillates for the second consecutive day in a narrow band, unable to establish a clear direction. The continued divergence in the Fed and BoJ's policy outlook should serve as a tailwind and restrict the downside. In addition to favouring bulls, the technical configuration bolsters expectations for a move towards the 150.00 level.
The USD/JPY pair extends its second consecutive day of sideways consolidation and remains confined in a narrow range near the mid-149.00s Tuesday during the Asian session.
Uncertainty surrounding the next policy move of the Federal Reserve (Fed) maintains advocates of the US Dollar (USD) on the defensive. The USD/JPY pair faces a headwind from this and rumours that Japanese authorities will intervene in the foreign exchange market to bolster the domestic currency. However, the decline continues to be mitigated due to the Bank of Japan's (BoJ) adoption of a more dovish stance, which may further weaken the Japanese Yen (JPY).
The USD/JPY pair is maintaining its position above a technical trend line that extends upwards from the monthly swing low. Presently located in the vicinity of 149.15, the aforementioned support now aligns with the 100-period Simple Moving Average (SMA) on the 4-hour chart; as such, it is anticipated to function as a critical juncture. Conversely, daily chart oscillators continue to maintain their position in the positive and bolster the likelihood of decline buying at lower levels.
Before placing bearish wagers, it would be prudent to await a conclusive break below the aforementioned trend-line support. A subsequent decline in price below the 149.00 round number could potentially push the USD/JPY pair in the direction of the 200-period SMA support area near 148.15. This is closely followed by the 148.00 level, below which the downward trajectory may continue in the vicinity of 147.30-147.25, where it could retest the October 3 swing low.
Conversely, the area between 149.80 and 149.85 is expected to serve as a prompt obstacle prior to the psychological threshold of 150.00 or the possible intervention level. A sustained advance beyond this level will be regarded by bullish traders as a new catalyst and pave the way for a subsequent upward movement towards the round number of 151.00. Potential extension of the momentum could ultimately bring the USD/JPY pair nearer to the 152.00 level, which represents a multi-decade high last observed in October 2022.
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