The USDJPY currency pair has been gaining momentum, bouncing back from a dip at the 141.40 support level and rising towards an intraday high of around 141.75 during Wednesday's European session. This recent recovery was celebrated by the Yen pair, which marked the latest breakout from an immediate resistance line originating from the yearly top marked on Monday.
The upswing in the USD/JPY pair is substantiated by bullish MACD signals and a strong RSI (14) line that is not overbought. These indicators lend weight to the upside bias surrounding the USD/JPY pair, suggesting a potential continuation of this upward trend.
Given the current bullish trend, the USD/JPY pair is poised to approach the yearly peak around 142.25, with 142.00 acting as an immediate resistance level. However, the top line of the aforementioned rising wedge, situated close to 142.55 during the press time, may restrict the pair's further advances beyond 142.25.
In the forex market, the USD/JPY pair's performance can have significant implications for traders. If the bulls can defy the bearish chart pattern by crossing the 142.55 resistance, they could target a horizontal area around 145.00. This area includes the early September 2022 top and the bottom of last October. On the other hand, a downside break of the 141.40 support level could challenge the bears, as the 200-HMA and a two-week long rising trend line, close to 140.50 and 139.80, respectively, could deter sellers.
The forex market, particularly the USD/JPY pair, is influenced by a range of factors. The USD/JPY pair is the 2nd most liquid currency pairing in the forex market, accounting for 13% of total transaction volume. Furthermore, Japan's current account surplus supports the Yen's safe haven status, making it a preferred choice during periods of political and/or economic uncertainty. Monetary policy and trade dynamics are also key drivers for this forex pairing. The recent performance of USD/JPY, therefore, provides a valuable lens through which to understand broader forex market trends.