USDJPY – break above the daily cloud sparks a renewed bullish signal

USDJPY strengthened on Wednesday, supported by a more cautious tone on monetary policy from Fed Chair Powell alongside increased demand from Japanese importers.

The dollar regained momentum after Powell emphasized the need for a balanced approach as the central bank faces two opposing forces: weakening labor market conditions on one side and persistently elevated inflation on the other.

While Powell’s latest remarks diverged from his recent messaging, markets still expect two additional rate cuts by year-end.

The greenback advanced 0.5% through mid-European trade, with renewed strength erasing the prior three-day decline and generating a bullish signal on a break above the daily Ichimoku cloud (cloud top at 147.88).

A daily close above the cloud would confirm the signal and reinforce the near-term outlook, opening the way toward the next barrier at 148.49 (200DMA, currently under pressure). A sustained break there would signal continuation of the recovery leg from the Sep 17 low at 145.47, exposing 149.13 (Sep 3 lower top).

The technical picture on the daily chart is improving, with moving averages aligning into a stronger bullish setup and 14-day momentum attempting to cross into positive territory, while price action remains above the top of the thick daily cloud.

The recent bull-trap formed below the 100DMA further underpins the recovery outlook.

Res: 148.49; 148.84; 149.13; 149.63
Sup: 148.20; 147.88; 147.56; 147.19