USD/JPY Price Analysis: Rallies to multi-week highs around 139.00

• USD/JPY reached a fresh 7-week high at the 139.00 figure.
• Once the 139.00 figure is broken, the USD/JPY YTD high is next at 139.38, as the pair aims towards 140.00.

The USD/JPY extends its rally, underpinned by higher US Treasury bond yields, on Monday, amidst a downbeat sentiment propelled by last Friday’s Jerome Powell speech. He reiterated the Fed’s commitment to tackle inflation to the 2% goal, despite causing slower economic growth, alongside “pain to households and businesses.” At the time of writing, the USD/JPY is trading at 138.73, above its opening price.

USD/JPY Price Analysis: Technical outlook

Since the beginning of August, the USD/JPY resumed its upward bias after diving towards fresh two-month lows at 130.39. Worth noting that on its way toward current exchange rates, the USD/JPY cleared the 20 and 50-day-EMAs, opening the door to further gains.

The bias is further supported by the Relative Strength Index (RSI), which downtick under the 60 reading, made a U-turn, and broke above its 7-day RSI’s SMA, showing buyers gathering momentum.

In the short term, the USD/JPY is neutral-upward biased, but as the RSI entered overbought conditions, the USD/JPY retraced from daily highs, hitting 139.00. However, the USD/JPY’s first resistance would be the 139.00 figure. Once cleared, the next supply zone will be the YTD high at 139.38, followed by the psychological 140.00 mark.

On the other hand, the USD/JPY first support would be the R2 daily pivot at 138,41. Break below will expose subsequent pivot point levels, like the R1 at 137.95, followed by the 20-EMA at 137.39, before tumbling to the daily pivot at 137.07.

USD/JPY Key Technical Levels