USD/JPY has been rising since the early European session, extending the rebound from the level of 114.10.
The currency pair is located above the EMA of 200 and above the SMA of 21, showing a positive signal that could go up in the short term to +1/8 of Murray at 116.01.
Fed officials downplayed the possibility of a 50-basis point interest rate hike in March, which in turn weakened the dollar. This favored the yen which acts as a safe haven asset.
According to the 4-hour chart, the USD/JPY pair has a bullish bias. The ongoing correction from the zone of 115.70 (8/8) to 114.10 could give it a new boost to reach the key level of 116.00.
The eagle indicator is hovering in the extreme overbought zone. It is better to wait for a correction towards the 200 EMA or towards 5/8 Murray. A technical bounce around this zone will be an opportunity to buy with targets towards 114.84, 115.23, and up to 115.62.
Conversely, if the yen reverses and consolidates below 114.40, then an acceleration to the downside could occur. This will be a sign of a further bearish trend which will favor the yen to continue strengthening with targets towards 114.06 and up to 113.51.
Our trading plan is to wait for a bounce off the 200 EMA to buy or as long as it trades above the 21 SAM. The breakout of the downtrend channel is a sign that the yen could rally to 116.00.
Support and Resistance Levels for February 3 - 4, 2022
Resistance (3) 115.62
Resistance (2) 115.23
Resistance (1) 114.84
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Support (1) 114.46
Support (2) 114.06
Support (3) 113.81
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Scenario
Timeframe H4
Recommendation: buy above or if rebound
Entry Point 114.78 -114.45
Take Profit 115.23; 115.62
Stop Loss 115.38
Murray Levels 114.06 (4/8) 114.45 (5/8) 114.84 (6/8) 115.23 (7/8)
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