USD/JPY – Bulls Maintain Control in Low-Volume Boxing Day Trading
The USD/JPY pair remains firm in holiday-thinned trading on Thursday, approaching last Friday’s peak of 157.92, the highest level since mid-July.
The pair is poised for its fourth consecutive weekly gain and a monthly advance of over 5% in December.
Hawkish signals from the Federal Reserve, driven by expectations that inflation will stay elevated and delay rate-cut plans, along with the significant divergence between Fed and BoJ monetary policies, continue to support the pair.
In the near term, the price action has held above the broken Fibonacci resistance at 156.67 (76.4% retracement of the 161.98/139.57 correction), which now serves as strong support. Additional supports are provided by the rising daily Tenkan-sen at 155.19 and key levels at 153.62/40 (daily cloud top, daily Kijun-sen, and the broken 61.8% Fibonacci level).
Robust bullish momentum and multiple golden crosses on the daily chart reinforce a positive near-term outlook, with the thick and rising daily Ichimoku cloud offering further support.
However, overbought conditions warrant caution. Traders are also closely monitoring potential action from the Bank of Japan, especially after verbal intervention hints. Markets anticipate that authorities may intervene if the pair rises above the 160 mark, similar to their actions in July.
Resistance Levels: 155.95, 156.95, 157.61, 158.00
Support Levels: 157.00, 156.55, 155.88, 155.19
