Bulls may hold in extended consolidation before attacking key barriers
The USDJPY regained traction and rose near new multi-week high in early Friday’s trading, but the price action is still within the limits of a consolidation range of past three days.
The dollar remains supported by Fed’s recent hawkish comments which signal prolonged policy tightening cycle, keeping bullish stance for fresh acceleration higher.
Technical studies on daily chart show moving averages (10/20/30/55) in bullish setup and underpinning the action with a number of bull-crosses, although positive momentum is fading and stochastic is heading south after forming a bearish divergence before emerging from overbought territory.
This may produce headwinds to larger bulls and delay fresh push higher for test of targets at 136.66/90 (Fibo 38.2% of 151.94/127.22 / daily cloud top).
Extended consolidation should stay above rising 10DMA (134.17) which tracks the ascend for past three weeks, however deeper dips towards 133.05 (broken Fibo 23.6%) cannot be ruled out, but expected not to be very harmful for larger bulls.
Traders turn their focus to the key economic event today, release of US PCE index, Fed’s preferred gauge of inflation, due to be released later today and expected to provide fresh signals for the greenback.
Res: 135.36; 136.66; 136.90; 137.47
Sup: 134.17; 133.44; 133.05; 132.54