USD/JPY jumped on Tuesday as short-lived risk appetite was hit by renewed tensions in the Middle East that pushed the price to the upper side of a narrow near term range (158.80/159.35).
The action remains well supported by thick daily Ichimoku cloud (top of the cloud lays at 158.85), as well as bullish daily studies (strengthening positive momentum / multiple DMA bull-crosses) that keeps near term focus at the upside for now.
On the other hand, traders remain very cautious, keeping the price within narrow range for a couple of days, as the pair approaches 160 level, where Japan’s authorities intervened on Apr 30, with another action to boost weakening currency, not ruled out.
In such environment near-term direction remains unclear, with quick changes in risk mode from the situation in the Middle East, adding to current picture.
However, anticipated impact from intervention and bearish divergence on daily stochastic, suggests that the downside is still vulnerable, with cautious shorts (accompanied with tight stops) would be preferred near term scenario (violation of cloud top to generate bearish signal).
Res: 159.30; 159.85; 160.00; 160.45.
Sup: 158.80; 158.55; 158.30; 157.87.
