USD/JPY Price Analysis: Bulls likely to target 130.00 amid risk-on/modest USD strength

• A combination of supporting factors pushed USD/JPY to a two-week high on Wednesday.
• The technical set-up favours bullish traders and supports prospects for additional gains.
• Any meaningful pullback could be seen as a buying opportunity near the 129.00 mark.

The USD/JPY pair gained positive traction for the third successive day and climbed to a two-week high, around the 129.60 region on Wednesday. The risk-on impulse undermined the safe-haven JPY and acted as a tailwind amid modest US dollar strength.

From a technical perspective, the overnight move up confirmed a breakout through a descending trend-line extending from a two-decade high touched in May. The said resistance coincided with the 38.2% Fibonacci retracement level of the 121.28-131.35 rally.

The subsequent move beyond the 23.6% Fibo. level and the 129.00 round-figure mark could be seen as a fresh trigger for bulls. Given that oscillators on the daily chart have again started gaining traction, the set-up supports prospects for additional gains.

Hence, some follow-through strength, back towards reclaiming the 130.00 psychological mark, now looks like a distinct possibility. The momentum could get extended and push spot prices to the next relevant hurdle near mid-130.00s en-route the 130.80 area.

On the flip side, any meaningful pullback could be seen as a buying opportunity near the 129.00 mark. This, in turn, should help limit the downside near the daily swing low, around the 128.60 region. The latter should act as strong support for the USD/JPY pair.

Failure to defend the aforementioned support levels might prompt some technical selling and make the USD/JPY pair vulnerable to retesting sub-128.00 levels. The downfall trajectory could eventually drag spot prices towards the 127.40-127.35 confluence resistance breakpoint.

USD/JPY daily chart

Key levels to watch