USDJPY has not had a clear trend since January this year as the pair has been trading in a broad range between 108 – 114. In the short term, prices have moved to the upper half of the range, having firmed up this week.
USDJPY has made an astounding recovery after bouncing from the 108 area in September. But the pair failed to break out of the range and found strong resistance at the top of the range, consequently reversing back down. The market found strong support in the 111 area, which is around the mid-point of the range.
Technical indicators are pointing to more consolidation in the near term, as the RSI is flat and hugging the 50 level, while the 50 and 200-day moving averages are moving sideways. USDJPY is expected to remain supported on dips to 111 and capped in the zone below the key 113 level and the 50-day MA at 112.80.
Overall, risk remains on the upside despite the pullback from 113 this week. The undertone in the near term is expected to remain positive as long as the USDJPY remains above 111.