Analysts at Credit Suisse are bullish on the USDJPY. Their latest analysis is for the pair to push towards the high of June 2020 at 109.85, once the pair crosses above the 61.8% Fibonacci retracement from the swing move of the drop of March 2020 to July 2020 high at 108.17/108.23. However, the break of the resistance is not expected to occur immediately, as the analysis provided by Credit Suisse suggests a short-term cap at the resistance level.
A further look at the analysis reveals the following:
– potential for resistance at 109.03, with a pitstop at 108.55, followed by another upside target at 109.85 (June 2020 high).
– A tougher resistance target at the 50% retracement from the 2016 – 2020 bearish trend.
– Support seen at 107.82. However, a breakdown brings in 107.15 into the picture, followed by 106.97 which should hold firm. This move is expected to ease the upside bias.
The analysis rounds off by saying that a price move below 106.66 suggests that the “best of the strength has been seen for now.” In other words, a drop below 106.66 is expected to turn the bias for the pair back to a bearish one.
This analysis mirrors the recent demand for the USD as a result of rising bond yields. With the Fed Chair Jerome Powell failing to provide a clear response to the issue in the WSJ online event of Thursday, this appears to have cleared the way for additional demand on the US Dollar. Markets are looking towards the Non-Farm Payrolls report for further direction this Friday.
Technical Outlook for USDJPY
The weekly chart reveals that the pair has hit the resistance zone at 108.46/108/81. A break of this zone allows bulls to target 109.70, where the highs of Nov/Dec 2019 and June 2020 are seen. Above this level, further resistance is expected at 110.586, even though a potential pitstop exists at 110.13.
On the other hand, rejection and pullback from the current barrier could bring 107.82 into the picture, with 106.99 and 106.65 serving as potential support levels. These areas may also serve as potential dip-buying points if buyers decide to take profit now and look for cheaper re-entry points in the future.
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USDJPY Weekly Chart
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