Early in the American session, the Japanese Yen (USD/JPY) is trading around 141.55. It is pulling back after hitting a weekly high of 141.94.
In the chart, we can see a strong upward movement due to the CPI data from Japan that were negative for the currency. In the next few hours, a technical correction is expected towards the psychological level of 140.00
Technically, the USD/JPY pair is overbought according to the 1-hour chart but it could try to rally and reach 142.18. This level represents a strong technical reversal zone. As long as it trades below 142.20, we could expect a technical correction to occur and the instrument could reach 140.62 (6/8 Murray and 21 SMA).
In the next few hours, we expect it to fall below 141.70 and this will be seen as a signal to sell with targets at 140.60 (6/8 Murray) and the psychological level of 140.00.
If the Japanese yen continues to rise in the next few hours, the key will be to wait for it to reach the top of the channel or 142.18 (7/8 Murray), then it will be seen as an opportunity to sell.
From July 18, when USD/JPY reached the low of 137.67 until July 21, when it reached the maximum of 141.94, the instrument was devalued by more than 400 pips. This suggests that there is a technical correction in the next few days. The eagle indicator is giving an overbought signal, therefore any technical bounce below 7/8 Murray in the next few days will be a selling opportunity.
