A momentary breather for the pair? Likely so. The pause comes after some intervention talk last week among Japanese officials, and that kept buyers more guarded in pushing for a move towards 130.00.
Since then, the pair has stalled somewhat although the move does reflect action in the bond market as well. 10-year Treasury yields are down 3.8 bps to 2.789% today and that is seeing USD/JPY down 0.3% to 127.75 at the moment.
Looking at the near-term chart above, it is also evident that the upside momentum has met a bit of a pause. Price action has fell back below the 100-hour moving average (red line) but is staying somewhat supported above the 200-hour moving average (blue line). That hints at a more neutral near-term bias currently.
It's all about the next move and month-end flows will also factor into trading over the next few days. Equities had looked sluggish mostly but pulled off a bit of a turnaround yesterday, though it isn't much when you weigh that against the moves throughout the month. The bond market remains key in my view but perhaps there might be more push and pull there from hereon until we get to the Fed next week.
As such, that could keep USD/JPY well rested between the 125 and 130 range in the bigger picture. But in the context of price action now, there is minor support around 127.34-45 with the 200-hour moving average a key one to watch as well. As for upside levels, the 100-hour moving average is the first notable level before getting to 129.00 and then the recent highs around 129.40.
