The USD/JPY is under pressure at 115.00, reverting from four-year highs of 115.24 hit in the early hours of the Asian trading day.
The decline in the pair may be traced to a decline in Treasury rates throughout the curve as a result of the anticipation around the release of the Federal Open Market Committee minutes.
The decline in rates is putting a lid on the Dollar’s gain, allowing the bulls in the USD/JPY to take a break. All eyes are on the data flow from the United States and the minutes from the Federal Reserve to determine the future direction of the market.
USD/JPY Technical Overview
USD/JPY CHART Source: Tradingview.com
Upon closer inspection, it appears that the price of the USD/JPY has completed an upside breach from the almost one-month-old rising wedge pattern, having ended Tuesday above the modestly bullish trendline barrier at 114.99.
Nevertheless, with the 14-day Relative Strength Index (RSI) going south of 50.00, the bulls appear to have lost their ability to push the market higher. If Tuesday’s low of 114.48 is not broken on a sustained basis, the door to more declines might be opened.
As a result of the purchasing revival, the multi-year peaks at 115.24 may be retested, with the 115.50 psychological threshold being targeted as a target above that level.
Overall, the route of least resistance continues to go upward, and any retreat might be viewed as a good chance to purchase into the dips.
USD/JPY Fundamental Analysis
According to the FX specialists at UOB Group, the USD/JPY must pass 115.25 to try a move to 115.55 in the next few weeks.
Observation throughout 24 hours: Earlier this week, they stated that there was an opportunity for the USD to hit 115.05 first before a downturn may be envisaged.
They went on to say that the key resistance level of 115.25 is not anticipated to be challenged anytime soon. The USD soared to 115.15 before falling abruptly to a low of 114.48, proving that their prediction was accurate.
Having said that, they were not prepared for the ensuing jump to 115.18 cents. Even though the quick gain looks to be getting ahead of itself, the USD may be able to break through critical resistance around 115.25.
For the time being, it appears that a sustained increase beyond this level is doubtful (the next barrier is at 115.55). Support is located at 114.90, with resistance at 114.70.
Within the next 1-3 weeks: Yesterday (November 23, spot at 114.75), they remarked that rising momentum is beginning to improve, and they thought that the USD may advance to 115.25 in the coming weeks.
Specifically, they stated that “the potential for a sustained increase over 115.25 is not favorable. Afterward, the USD rose to 115.18 before finishing on a solid note at 115.12 per Dollar.
However, while the rising impetus has increased, the market has become overbought, and the USD must finish over 115.25 before an ascent to 115.55 can be predicted. If 114.30 (the “strong support” level, which was at 114.05 yesterday) is breached, it would signal that the present rising pressure has abated.