Bulls to accelerate on break of key barriers; consolidation likely to precede rally
The USDJPY keeps firm bullish tone early Monday and extends gains after Friday’s 1.8% rally (the second biggest daily advance this year).
Japanese yen remains under increased pressure following dovish BOJ on Friday, while the dollar is underpinned by wide expectations for Fed’s 25 basis points hike, in the meeting due later this week.
In addition, the risk sentiment was weighed by the news about troubled US First Republic Bank over the weekend, adding to dollar’s bullish stance, in the Labor Day holiday thinned volumes.
Bulls broke through pivotal Fibo barrier at 136.66 (38.2% retracement of 151.94/127.22) and cracked 200DMA (136.98) but may face increased headwinds on overbought daily studies and likely magnetic Wednesday’s twist of daily Ichimoku cloud (132.75).
Shallow consolidation should ideally hold above broken Fibo barrier at 135.95 (76.4% of 137.90/129.65) to offer better burying opportunities for acceleration through 200DMA, towards key short-term resistance at 137.90 (Mar 8 lower top).
Res: 136.98; 137.90; 138.17; 139.58
Sup: 136.14; 135.90; 135.10; 133.95