USDJPY seems primed to stretch its newly bullish trend further into the 107.00 area, having already retraced half of its 2020 bearish run.
With the RSI and the fast Stochastics fluctuating within the overbought territory, and the price flirting with the channel’s topline near 9-month highs, profit-taking actions are increasingly possible in the short term. The 50% Fibonacci of the previous downtrend is also challenging the price near 107.14, and should it hold firm, the pair may weaken to seek support around 106.65. In the event of a sharper decline, the 38.2% Fibonacci of 106.00 could provide some footing before all eyes turn to the 20-day simple moving average (SMA) and the bottom of the channel around 105.65.
Otherwise, a decisive step above the 50% Fibonacci could see a continuation towards the 108.00 level and the 61.8% Fibonacci of 108.22, unless the region around 107.65 manages to pause the rally. Such an extension could provide extra credibility to the ongoing uptrend, justifying the bullish cross between the 20- and 200-day SMAs.
In brief, USDJPY continues to support its positive trend in the short-term picture, though a downside correction cannot be ruled out as the pair keeps sailing within the overbought territory.
Note that the Fed chief Jerome Powell will be discussing the US economy on Thursday at 17:00 GMT, while US nonfarm payrolls are due on Friday at 13:30 GMT.
