USDJPY Stalls Below the 160 Barrier for a Second Straight Day

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USDJPY Stalls Below the 160 Barrier for a Second Straight Day

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USD/JPY

USDJPY stalled below the 160 barrier for a second straight day after a strong two-day rally. ActionForex expects a shallow pullback, with intervention risk and Bank of Japan tightening signals tempering buyers.

USDJPY trades just under a ten-month high on Thursday, after buyers met headwinds at the psychological 160 barrier. The level has capped the pair for the second straight day.

Partial profit taking is the likely scenario after the strong rally on Tuesday and Wednesday, the biggest two-day gains since mid-Sep. Positive momentum started to fade, and the stochastic entered overbought territory.

However, ActionForex expects any correction or consolidation to be shallow. The dollar remains well supported by hotter than expected inflation and increased hawkishness from Fed officials.

Dips should find ground above the broken 100DMA at 158.96, which would keep buyers in play for fresh attempts through the 160 pivot. A move through 160 would expose 161.00 and 161.33, the 76.4% Fibonacci retracement of 163.94/152.88.

Still, the persisting risk of intervention and signals that the BoJ remains on track for further tightening are expected to temper bulls. Resistance sits at 160.00, 160.39, 161.00 and 161.33. Support sits at 159.48, 158.96, 158.70 and 158.42.

Source: ActionForex

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