USD/JPY Price Analysis: Overbought near 133.00 but bulls refuse to give up yet

• USD/JPY rallies to the moon, challenges the 133.00 hurdle.
• The US dollar rises with the renewed uptick in the US Treasury yields.
• BOJ Kuroda’s intervention fails even though the pair is overbought on the daily chart.

USD/JPY is sitting at the highest level in 20 years just below the 133.00 barrier, as bulls take a breather before the next push higher.

The fresh leg up in the US dollar offered the much-needed boost to USD/JPY buyers, which drove the pair closer to the 133.00 mark. This comes as the US Treasury yields broke their Asian consolidation to the upside in early Europe.

Earlier this Tuesday, the major pulled back briefly after Bank of Japan (BOJ) Governor Haruhiko Kuroda intervened verbally, by noting that the “big yen decline in a short period of time is negative for the economy.”

Looking ahead, the further upside in the pair appears likely, as the dollar is likely to extend higher in tandem with the yields amid the return of recessionary fears. Major central banks are on an aggressive tightening cycle, raising concerns over a global economic slowdown.

Technically, USD/JPY’s daily chart shows that the previous week’s bullish wedge confirmation has allowed bulls to flex their muscles, embarking on a new uptrend.

The immediate upside hurdle is now aligned at the 133.50 psychological level, as the buying pressure around the spot remains unrelenting.

USD/JPY: Daily chart

However, the 14-day Relative Strength Index (RSI) is peeking into the overbought territory, challenging the bullish commitments.

A correction could be in the offing, as the price has outpaced the pattern target measured at 132.77.

If a corrective decline kicks in, then the pair could retrace towards the 132.00 region, below which the daily low of 131.87 will come to the rescue of bulls.

Further south, Monday’s low of 130.43 will be on sellers’ radars.

USD/JPY: Additional levels to consider