FX.co ★ USD/JPY

Technical Analysis (USD/JPY H4) On the H4 timeframe, USD/JPY is consolidating near the upper bound of a broader multi-week range, with the current candle showing a bullish bias (open 156.85, high 156.96, low 156.78, close 156.92). The price action is currently testing a critical zone just below the 157.00 psychological level. The overall chart structure shows a series of higher lows since the late-December swing low near 140.30, suggesting the underlying uptrend remains intact, albeit entering a phase of potential resistance. The Moving Average (MA10) can be inferred to be sloping positively and acting as dynamic support, likely residing near the 156.55-156.65 region, which aligns with recent minor swing lows. The price holding above this MA indicates short-term bullish control. Momentum indicators present a mixed but cautiously optimistic picture. The RSI(14) at 56.58 is in bullish territory but not overbought, leaving room for further upside before reaching the 70 threshold. The MACD histogram is positive (0.076 above the signal line at 0.038), confirming a bullish momentum bias, though the absolute values are small, suggesting the bullish momentum is present but not yet strong. The pair remains highly sensitive to the divergence between the Federal Reserve and the Bank of Japan (BoJ) monetary policy paths. While the Fed has signaled a pivot towards rate cuts in 2024, the timing and pace remain data-dependent, supporting the USD relative to currencies where central banks are more dovish. Conversely, the BoJ maintains its ultra-accommodative stance, with any hints of policy normalization being gradual and cautious. This fundamental backdrop of sustained yield differentials continues to underpin the USD/JPY pair, though risk sentiment and intervention rhetoric from Japanese officials can cause sharp, temporary pullbacks.

Trade Setup & Summary Summary: USD/JPY maintains a bullish technical structure on the H4, supported by positive momentum indicators and fundamental policy divergence. The immediate focus is on a breakout above 157.00. Trade Setup: · Direction: Bullish, anticipating a break above consolidation. · Entry Trigger: A confident H4 close above 157.10 (resistance from early January highs). · Profit Targets: TP1 at 157.65 (prior swing high), TP2 at 158.20 (key range top from November). · Stop Loss: Placed below the recent swing low and MA10 support, around 156.50. · Risk: A failure to break higher and a break below the MA10 could see a deeper retracement towards the 155.45-156.00 support zone. All trades should consider the ever-present risk of verbal or actual FX intervention by Japanese authorities, which can trigger volatile, directionally negative spikes.