USDJPY is in a broad neutral trend as the market remains trapped in a range between 108–114 during the past 8 months. In the short-term, the pair rose towards the upper end of the range but has found strong resistance and reversed back down from a high of 114.73.
The bullish phase from 107.31 has turned neutral with prices currently consolidating mostly in the 113-handle. Yesterday’s dip below 113 has found support at the 50-day moving average resulting in a bounce back to test this key level.
Prices need to move further above the key 113 level in order to ease immediate downside pressure. This level is important since it is the 23.6% Fibonacci retracement of the upleg from 107.31 to 114.73. Failure to rise above it could result in prices threatening to break below the 50-day MA. A drop below the 200-day MA would bring further losses towards 111 (the 50% Fibonacci) and 110.15 (61.8% Fibonacci), moving towards the lower end of the range.
A rise above 114 would help USDJPY gain upside momentum for a re-test of the 114.73 high and then from here the overall trend would turn bullish to target the next high at 118.66.
In the big picture, USDJPY remains range-bound on the daily chart but short-term price moves have been bullish and trend indicators are bullish after the crossover of the 50-day MA above the 200-day MA.
