Increased market bets on a tighter monetary policy for longer from the US Fed following some hawkish remarks from some Fed officials have boosted the USDJPY currency pair hit a new six-month achieved earlier during the trading session.
The cross, also known as the Gopher, is having a mixed session, with the bulls firmly holding on to the optimism around the US debt ceiling talks and the recent hawkish Fed members’ comments to push the price. However, the recent Japanese PMI data, which showed that the composite PMI expanded at its fastest pace in nearly a decade and the manufacturing index grew for the first time in seven months, helped give support to the Japanese Yen during the trading session.
The Gopher has formed an ascending channel trading pattern as the Japanese Yen continued to lose ground to the US dollar on monetary policy divergence. The currency pair is trading around the upper trendline of the channel, and the bulls could be hoping that the current bullish optimism around the greenback could continue to propel the Gopher higher. Thus, the market could be looking for the reaction of the cross on the channel’s upper trendline, as the break above could trigger a run towards the resistance level (R1) at 139.263 and the resistance level (R2) at 140.567.
The bears could hope that the Japanese PMI data could sustain the pullback from the upper trendline. The weekly pivot point would act as immediate support to the bears’ rally lower. The fall of the pivot point would bring the support level (S1) at 136.139 and the lower trendline into play.
The bulls have loosened their grip on their recent rally following the break above the six-month ceiling as the bears look to reclaim some of the recent losses. With PMI data from the US due later today, the bulls could hope the data could favour a break above the trendline towards the significant levels above.
Sources: TradingView, Reuters, CNBC.
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