USD/JPY Biased to the Upside for Now
USD/JPY (U.S. dollar – Japanese yen) continued its upward trajectory in the third quarter with remarkable continuity, driven by the resounding momentum of the greenback in currency markets. Against this backdrop, the pair remained firmly entrenched within a medium-term ascending channel, navigating flawlessly between its lower and upper boundaries, as illustrated in the weekly chart below.
In late September, USD/JPY pushed above the 148.00 level, as bullish aspirations zeroed in on 150.00 – the upper boundary of the channel mentioned previously. Buyers may have a difficult time overtaking this barrier given its technical significance and in light of the market's overbought status. However, should a breakout play out, the pair may journey toward its 2022 peak at 151.95. On further strength, the spotlight would shift to 160.60 which aligns with the high observed in April 1990.
On the flip side, should sellers make a comeback earlier than anticipated and initiate a bearish reversal, the first support to keep an eye on is located around the 144.50 threshold. While this zone may offer a potential foothold for prices during a pullback, a breach could amplify the downward pressure, setting the stage for a move towards dynamic channel support at 142.00 at the time of writing. If this floor falter, USD/JPY may steer towards 137.50, a key level just a touch above the 200-day simple moving average.
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USD/JPY Weekly Chart
Source: TradingView, Prepared by Diego Colman
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| Change in | Longs | Shorts | OI |
| Daily | -6% | -3% | -3% |
| Weekly | 7% | 3% | 3% |
