USDJPY has been neutral during the past 7 months, with the market trading in a broad range between roughly 108 and 114 since mid-March. The recent rally off 108 to 114 has lost steam.
Technical indicators are in bullish territory (RSI above 50 and MACD above zero) and suggest the market should be well supported on dips. A decline in USDJPY could find support at the 200-day MA at 111.73 and then at the 50-day MA at 111.26. A move below these support levels would target the lower end of the range at 108. From here, the breakout from the range would open the way towards the next major low of 101.18.
Strong resistance is expected in the 114-114.50 area, which if breached, would put USDJPY on the path to retest major highs from December 2016 at 118.66.
The short-term bullish phase that saw prices advance from the lower to the upper end of the range during September 8 to October 25 has ended. The odds for further USDJPY strength in the near term are low as momentum has weakened. The broader trend is expected to remain neutral.
