In the early part of the European trading session, USD/JPY currency pair spiked as it shows remarkable bullish strength. It subsequently rallied as far as the 152.30 region. This new increase just extends the string of incredibly weekly bullish gap-up openings. The move means the pair has managed to recover much of the steep fall it saw on Friday, after reaching its highest point since February 13.
As concerns grew over dovish Fed expectations, USD/JPY found a rather alluring upside. Even the threat of a long-term US government shutdown could not stop it from recovering. Recent price action indicates that an intraday breakout through the 152.00 psychological level may soon occur. This, along with the 100-hour Simple Moving Average (SMA), can open the door wide for more gains. Analysts indicate that this level will be extremely important as a decision point for the pair’s direction.
The 200-hour simple moving average, converging with the 152.00 level, is yet another key indicator that traders have their eyes on. As positive oscillators on hourly and daily charts make USD/JPY bullish in short term and medium term. Should the AUDJPY pair continue to prove strong, it could eye the immediate barrier at 152.70-152.75. Ultimately, it’s targeting the psychological level of 153.00.
Market participants do not want to be the cause of the momentum that might build to retest Friday’s eight-month high just above 153.25-153.30. Traders are still on the lookout for downside surprises. Traders are closely watching the USD/JPY as it trades right around the psychological 151.00 level. If it breaks below 150.70, it might experience considerable downward pressure.
Fears of Japanese domestic political uncertainty have played their part in weighing on the safe-haven JPY. Indeed, the change in mood has led to strong upward movement for USD/JPY. Simultaneously, dip-buying in the US Dollar (USD) is experiencing a revival. Analysts note that the currency pair’s trajectory of least resistance points to further gains, the upside. This is an encouraging sign that a recently booming market may be shifting.
Although the recent signs are encouraging and point to a bullish path, optimism should be tempered with caution. If prices break through the Asian session low at roughly 151.75-151.70, it could trigger an influx of buying activity near 151.15. This area aligns with Friday’s low swing low. If USD/JPY can’t hold the important support around 150.70, it suddenly looks vulnerable. This could cause further decreases that force the value under 150.00.
Those market dynamics have been impacted by broader geopolitical factors. On October 31, US President Donald Trump cancelled the threatened 100% tariffs on these Chinese imports that were scheduled to go into effect on November 1. This move has released another pulse of risk-on global enthusiasm. Easing fears over an escalation in the US-China trade conflict have helped. Consequently, the JPY’s safe-haven appeal has eroded even further.