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24 Oct 2022

USD/.JPY Price Analysis: Intraday rally stalls near 61.8% Fibo./100-hour SMA confluence

  • USD/JPY rebounds swiftly from a nearly two-week low touched earlier this Monday.
  • Resurgent USD demand and the Fed-BoJ policy divergence provide a strong boost.
  • Bulls now await sustained strength beyond the 149.55-149.60 confluence hurdle.

The USD/JPY pair attracts aggressive buying near the 145.45 region on Monday and rallied over 400 pips from a nearly two-week low touched earlier this Monday. The pair maintains its bid tone through the early North American session and is currently placed around the 149.15-149.20 region.

The initial market reaction to a suspected intervention by the Bank of Japan (BoJ) fades rather quickly amid resurgent US dollar demand. Furthermore, the risk-on impulse - as depicted by a generally positive tone around the equity markets - undermines the safe-haven JPY and offers support to the USD/JPY pair. Meanwhile, retreating US Treasury bond yields keeps a lid on any further gains, though a big divergence in the policy stance adopted by the BoJ and other major central banks favours bullish traders.

From a technical perspective, the strong intraday rally stalls ahead of the 149.50-149.55 confluence hurdle. The said area comprises the 100-hour SMA and 61.8% Fibonacci retracement level of the USD/JPY pair's sharp pullback from the 152.00 neighbourhood, or the highest-level August 1990 touched last Friday. This should now act as a pivotal point, which if cleared decisively should lift spot prices to the 150.00 psychological mark en route to the next relevant hurdle near the 150.55-150.60 area.

On the flip side, weakness back below the 149.00 mark now seems to find decent support near the 50% Fibo. level, around the 148.70 region. Any subsequent downfall could attract fresh buyers near the 148.30-148.25 region, which should help limit the downside near the 38.2% Fibo. level, around the 148.00 mark. A convincing break below the latter will negate any near-term positive bias and make the USD/JPY pair vulnerable to slide back towards retesting the 147.00 mark, or the 23.6% Fibo. level.

USD/JPY 1-hour chart

fxsoriginal

Key levels to watch

 

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