USD/JPY Price Analysis: Eases from multi-year tops, bulls pause near ascending channel resistance

• USD/JPY climbed to fresh multi-year tops on Tuesday amid sustained USD buying interest.
• The risk-off impulse benefitted the safe-haven JPY and capped the upside for the major.
• Bulls might now wait for a sustained strength beyond an ascending trend-channel hurdle.

The USD/JPY pair scaled higher for the fourth successive day and climbed to the highest level since December 2018 during the Asian session on Tuesday.

This also marked the fifth day of a positive move in the previous six and was sponsored by sustained US dollar buying, bolstered by expectations for an early policy tightening by the Fed. That said, the risk-off impulse in the markets underpinned the safe-haven Japanese yen and kept a lid on any further gains for the USD/JPY pair, at least for now.

Looking at the technical picture, the recent strong bullish momentum paused just ahead of a resistance marked by the top boundary of a near three-week-old ascending trend channel. Overbought RSI on short-term charts seemed to be the only factor that held traders from placing fresh bullish bets, though any meaningful corrective pullback seems unlikely.

From current levels, the trend-channel hurdle, around the 113.50-60 region, could act as a headwind for the USD/JPY pair. A convincing breakthrough will be seen as a fresh trigger for bullish traders and set the stage for additional gains. The pair might then accelerate the move and aim to reclaim the 114.00 mark for the first time since November 2018.

On the flip side, the 113.00 round-figure mark now seems to protect the immediate strong support. Sustained weakness below might prompt some technical selling. That said, any subsequent decline might still be seen as a buying opportunity near the 112.25-20 horizontal support. This, in turn, should help limit the downside near the 112.00 round figure.

USD/JPY 4-hour chart

Technical levels to watch