USD/JPY Rallies Near Key Technical Confluence as Momentum Shifts in Favor of Bulls
The USD/JPY currency pair has staged an impressive recovery after plummeting nearly 4% in September, finding support near the lower bounds of its developing downtrend. This shift in momentum has significantly improved the technical backdrop for the pair, but the rally is now approaching a crucial inflection zone where buyers will need to prove their strength.
The weekly Relative Strength Index (RSI) is attempting to reclaim neutral territory for the first time since early August, while the daily and 4-hour RSI have turned aggressively in favor of the bulls. This momentum shift has been fueled by a two-week rally that is now approaching its first major technical consideration at the 61.8% retracement of the decline off the yearly high at 159.75.
A breach above this threshold would be necessary to fuel the next leg of the rally, with subsequent resistance objectives eyed at the 2024 high-week close and the April high at 160.74, as well as the 2024 swing high at 161.95. On the other hand, a break below the 156.67 support level would be needed to validate a resumption of the July downtrend.