- The range-bound price moves constitute the formation of a bullish continuation rectangle pattern.
- Slightly overbought RSI on the daily chart seemed to hold traders from placing fresh bullish bets.
The Japanese Tankan survey showed an improvement in Large Manufacturing. The US ISM Manufacturing PMI is foreseen at 61.3 in March. USD/JPY holds on to gains and could reach fresh yearly highs.
The USD/JPY pair extended its sideways consolidative moves through the early North American session and remained confined in a narrow trading band, above mid-110.00s.
The USD/JPY pair lacks momentum amid the recent consolidation, but given that it holds near the year high, the risk is skewed to the upside. In the 4-hour chart, the pair continues to develop above bullish moving averages, while technical indicators consolidate near their recent highs in overbought territory.
Meanwhile, RSI (14) on the daily chart is holding above the 70.00 mark and points to slightly overstretched conditions. This seemed to be another factor that might hold traders from placing fresh bullish bets and positioning for any further appreciating move for the USD/JPY pair
This is closely followed by the key 110.00 psychological mark, which if broken decisively might prompt some aggressive long-unwinding trade. The USD/JPY pair might then accelerate the corrective fall towards testing weekly swing lows, around the 109.35 region touched on Monday.
On the flip side, the 110.85 region now seems to act as an immediate resistance ahead of the 111.00 round-figure mark. A sustained strength beyond will be seen as a fresh trigger for bullish traders and push the USD/JPY further towards March 2020 swing highs, around the 111.70 area.
