USDJPY Uptrend to Resume? (Dec 2, 2014)

A bounce off this support zone could lead to a rally to the previous highs past the 119.00 handle.

The rising trend line coincides with the 100 and 200 simple moving averages, which also hold as a dynamic support zone. Stochastic is moving up, which indicates a pickup in buying momentum. MACD is also heading higher, which could draw more dollar buyers in.

However, a break below the trend line could signify that the uptrend is over and that a reversal might take place. Earlier today, Japan’s average cash earnings report came in weaker than expected with a mere 0.5% uptick versus the estimated 0.8% gain. The previous reading was downgraded to show a 0.7% increase from the previous 0.8% gain.

There are no top-tier reports due from the US economy today, although FOMC officials Fischer and Yellen are set to give speeches. They could drop more hints on what the Fed has in mind when it comes to future monetary policy changes, which could have a huge impact on dollar price action. Hawkish remarks could lead to more gains for USDJPY, possibly until the 120.00 major psychological resistance and beyond.

On the other hand, cautious remarks could force the pair to give back more of its recent gains, which might lead to a dip until the 116.50 area of interest or lower. Later on this week, the NFP is up for release and this might trigger more volatile moves for the USDJPY pair.

By Kate Curtis from Trader's Way