The USD/JPY pair advanced up to 119.95 yesterday, having started its advance with European stocks’ positive opening, and accelerating after US strong housing data.
Additionally, investors may be already pricing in the possibility of further stimulus in Japan next week, although a move from the BOJ is still unclear.
The greenback has eased after rising to 120.07 earlier today and minor consolidation below this level would be seen, pullback to the upper Kumo (now at 119.44) cannot be ruled out, however, support at 119.14 should limit downside and bring another rise later, above said resistance would extend the rise from 118.06 low to previous resistance at 120.35 but break there is needed to provide confirmation and encourage for headway towards 120.57 resistance which is likely to hold from here.
Technically, the 1 hour chart shows that the technical indicators are losing their upward strength, but holding well above their mid-lines, whilst the price is above its 100 and 200 SMAs.
In the 4 hours chart, the price is now trapped between its 100 and 200 SMAs that anyway remain pretty flat, whilst the technical indicators also turned south, but remain well above their mid-lines, far from suggesting a continued decline.
In view of this, we are looking to buy dollar on pullback as 119.14 support should limit downside. Only below support at 118.91 would abort and signal top is formed instead, risk weakness to 118.55-60 but downside should be limited to 118.35-40 and price should stay well above last week’s low at 118.06, bring another rebound later.