The USD/JPY pair has surged to its highest levels since November last year, propelled by the overall strength of the US Dollar and extending the rebound seen on Monday. As European markets open on Tuesday, the Yen pair is trading with modest gains around 138.80.
Maintaining its upward trajectory, the USD/JPY remains solidly positioned within a three-week ascending triangle pattern, edging closer to the upper trendline. However, it is important to note that the overbought RSI (14) presents an immediate obstacle near 139.00, posing a challenge for buyers of the Yen pair.
Even if the quote manages to surpass the hurdle at 139.00, additional upside resistance is anticipated at the November 30, 2022, peak around 139.90, and the psychological level of 140.00.
These levels may impede bullish control before potentially giving way. Subsequently, the September 2022 low of 140.35 could serve as the final defense for bearish forces in the USD/JPY.
Conversely, a pullback for the USD/JPY pair appears unlikely unless the quote falls below the lower trendline of the aforementioned triangle, which is in proximity to the 138.00 level.
In the event that the Yen pair breaches the support at 138.00, bears may face challenges from a one-week-old horizontal support in the mid-135.00s and the 200-day Simple Moving Average (SMA) level near 134.90.
It is worth noting that sellers in the USD/JPY would require confirmation from an upward-sloping support line originating in late March, which currently resides around 134.65, to regain control.
Overall, the USD/JPY is expected to maintain its upward bias, although the path to further gains is likely to be characterized by obstacles and volatility.
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