From the 133.74 level, USD/JPY started a strong bullish movement but is now reaching overbought levels. On the H1 chart, we have noticed that in the last few hours, the instrument has been consolidating below 136.50.
The Japanese Yen keeps its uptrend channel intact. In the currency pair breaks and trades below 135.94, we could expect a bearish acceleration towards the 200 EMA located at 135.04.
On May 12, the eagle indicator reached the extremely overbought zone and since then, the Japanese yen has lost strength. If USD/JPY falls below 7/8 Murray in the next few hours, we could expect it to reach the support of 134.37 (6/8 Murray).
For the USD/JPY to resume its bullish cycle, we should expect a daily close above 1.3650. Then, the instrument is expected to reach 8/8 Murray located at 137.50.
With the Japanese Yen acting as a safe haven asset, gold and USD/JPY are anticipated to strengthen this week. Given that the USDX is losing strength due to the Fed's comments, this will give us an opportunity to sell the yen below 136.50 and the price could reach the area of 132.81(4/8 Murray) in the short term.
Our trading plan for the next few hours is to wait for the Japanese Yen to bounce above 135.94 to reach the weekly resistance zone at 136.45, the key level that could suggest an opportunity to sell with targets at 135.04 (200 EMA).
