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  • USD/JPY reversed an early dip to 100-hour EMA and moved back closer to two-week tops.
  • The technical set-up still favours bullish traders and supports prospects for additional gains.

The USD/JPY pair attracted some dip-buying near 100-hour EMA and moved back closer to daily tops, around the 105.70 region, during the early North American session. Bulls are likely to wait for some follow-through buying beyond the 105.80 region – or three-week tops set earlier this Wednesday – before placing fresh bets.

Meanwhile, technical indicators on the daily chart have been recovering from the negative territory. This coupled with the fact that oscillators on hourly charts maintained their bullish bias support prospects for additional gains. Hence, a move beyond the 106.00 mark, towards testing the 106.25-30 resistance zone, now looks a distinct possibility.

On the flip side, dips towards the 100-hour EMA, currently around mid-105.00s, might still be seen as a buying opportunity. That said, a convincing breakthrough, leading to a subsequent weakness below the 105.20-15 region will negate the constructive outlook and prompt some aggressive technical selling around the USD/JPY pair.

Bears might then drag the pair back below the key 105.00 psychological mark. The downward momentum could further get extended towards the 104.45 horizontal support before the USD/JPY pair eventually drops to multi-month lows, around the 104.00 round-figure mark.

USD/JPY 1-hourly chart

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Technical levels to watch