USDJPY jumps from a key support, upside remain uncertain

After a downbeat start to the key week, USDJPY grinds near an intraday high of around 132.80 during early Tuesday. As risk sentiment turns cautious, the pair is reversing the previous day’s losses, tracking the recovery in the US Dollar. The emphasis shifts to mid-tier US economic data.

The recent gains in the Yen pair could be attributed to higher US Treasury bond yields as well as the US Dollar, as markets await the release of the all-important Nonfarm Payrolls (NFP) on Friday. The latest challenges to sentiment, primarily emanating from the Organization of Petroleum Exporting Countries (OPEC) and its allies led by Russia, known as OPEC+, could add strength to the USDJPY pair’s run-up. However, recent pair buyers have been challenged by mixed data at home and anxiety ahead of top-tier US statistics.

The Bank of Japan’s (BoJ) Tankan Large Manufacturing Index for the first quarter (Q1) of 2023 fell to 1.0 from 7.0 in the previous quarter and 3.0 expected. the other hand, The March Jibun Bank Manufacturing PMI in Japan increased to 49.2 from 48.6 the previous month. The figure below 50, on the other hand, indicates a contraction in private manufacturing activity.

USDJPY Technical Outlook

In doing so, the Yen pair bounces from a convergence of the 100-bar SMA and a one-week-old ascending trend line, reversing the previous day’s losses.

Although the Yen pair has recovered from the 132.30 support confluence, bearish MACD signals and the failure to cross the 200-SMA, which was around 134.00 at the time of writing, pose a challenge to the bulls. Even if the USDJPY crosses the 134.00 level, a six-week horizontal resistance area near 135.10 may limit further gains. It’s worth noting that the round numbers 135.40 and 136.00 represent extra filters to the north.

If the price remains above 136.00, the chances of a new Year-To-Date high increase. A high, currently hovering around 137.90, cannot be ruled out.

On the other hand, a clear break of the 132.30 support confluence is required for the Pair bear to return.

Nonetheless, the 61.8% Fibonacci retracement level of the USDJPY pair’s February-March upside and the 50-SMA, both near 131.80, can act as the buyers’ last line of defense.

Following that, the 130.00 round figure and the previous monthly low near 129.65 may pique the interest of USDJPY sellers.

Overall, the USDJPY is likely to extend its recent rally, but the recovery moves have limited upside potential.

USDJPY Daily Trends