The USD/JPY pair continues to strengthen, maintaining its upward trend and reaching a one-week high early on Monday.
The pair is celebrating its upward breakout from a horizontal range that has been in place since April 28, located close to 135.50. Furthermore, it has successfully surpassed the 200-hour moving average (HMA) level near 134.90.
Nevertheless, the bullish momentum for USD/JPY faces resistance from a horizontal resistance zone that has been in existence for the past 11 days.
Additionally, the overbought reading on the 14-day relative strength index (RSI) and the sluggish signals from the moving average convergence divergence (MACD) indicator are also putting pressure on the USD/JPY bulls, preventing them from pushing beyond the 136.40-45 resistance range.
If, however, the buyers of the USD/JPY pair ignore these aforementioned factors, it is not out of the question to see a rally towards the previous monthly high around 137.80, followed quickly by the yearly peak observed in March near 137.90. The 138.00 level could also come into play.
Conversely, if the mentioned HMA levels near 134.90-80 are breached, it does not necessarily mean that USD/JPY bears will take control. There is an upward-sloping support line that has been in place since April 26, close to the 134.00 mark, which could act as the last line of defense for the buyers.
Overall, while further upside potential remains for USD/JPY, the scope for further gains seems limited.
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