USDJPY has been climbing within a well-defined ascending channel since late last year, with price recently pulling back sharply from the channel top near 164.00 before finding a floor around the 155.24 level, which coincides with the bottom of the channel.
The pair has since staged a recovery, currently trading near 159.80, right in the middle of a cluster of Fibonacci extension levels drawn from the recent swing. The 38.2% level at 158.77 has already been reclaimed, and price is now testing the 50% level at 159.86. If this zone holds as support on any dips, USDJPY could resume its climb toward the 61.8% extension at 160.96 or higher.
A break above that could open the door to the 76.4% level at 162.31, with the 100% extension at 164.49 marking the next major upside target, aligning with the prior swing high and the top of the ascending channel.
The 100 SMA remains above the 200 SMA, confirming that the path of least resistance is still to the upside. Price is also trading above both indicators, which could continue to serve as dynamic support on pullbacks, particularly since the gap between the two is widening to reflect strengthening bullish momentum.
Stochastic recently dipped into oversold territory during the sharp correction but has since turned higher, reflecting a return in bullish pressure. The oscillator still has room to climb before reaching overbought conditions, suggesting the rebound could have further to run.
RSI, meanwhile, is also recovering from oversold levels and climbing back toward the midline, indicating that buyers are regaining control after the recent selloff.
USDJPY is likely to take cues from leading US jobs indicators, as traders are currently positioning ahead of Friday’s NFP release. The jobs report could either provide context for Warsh’s hawkish Jackson Hole speech or undermine Fed tightening expectations, making it a key event to watch for this pair’s direction.
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