USDJPY Closing Back In On 160.00 Yen-Tervention Zone

USDJPY has staged a strong recovery from the early May lows around 155.00, climbing steadily back toward the key 160.00 psychological resistance that has capped rallies multiple times in recent months.

The pair is currently nearing this ceiling zone, which has historically attracted intervention threats from Japanese government officials. The 160.00 area marks the line in the sand for many traders, as the Ministry of Finance and BOJ have stepped in to support the yen whenever the pair approached this level.

A pullback from this resistance could take place as exporters and intervention-wary participants book profits, with the 100 SMA dynamic support around 158.500 likely to attract dip buyers.

A larger correction could still reach the 200 SMA dynamic support closer to 158.30, which could be the floor for any bullish pullback. If any of these hold as support, USDJPY could resume the climb to retest the 160.00 ceiling, while a break above the resistance zone could clear the path toward the swing highs near 161.00 or higher.

The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. The gap between the indicators is widening slightly to reflect strengthening bullish pressure following the recovery from the May dip.

However, stochastic is turning lower from the overbought area to reflect exhaustion among buyers and a potential return in selling pressure. The oscillator has plenty of room to slide before reaching the oversold zone, which means that the correction could keep going until that happens.

RSI also appears to be rolling over after testing the overbought region, showing a bit of bearish divergence as price made higher highs while the oscillator made lower highs. This suggests that bullish momentum is fading and a deeper pullback could be in the works.

US data points have landed softer than expected, as the core PCE showed muted inflationary pressures while the preliminary GDP reading saw a slight downgrade from the advanced version.