USD/JPY Price Analysis: Retraces from 24-year highs around 147.60s on soft US dollar

• USD/JPY reached a fresh 24-year high at around 147.67 due to US inflation numbers.
• Once the dust settled down, the greenback weakened, so the USD/JPY traded back below 147.00.

The USD/JPY is paring its gains below the 147.00 figure after registering fresh 24-year highs courtesy of US inflation data, sparking a jump in US Treasury yields, as expectations for further Fed tightening increase, with traders fully pricing a 0.75% hike on November. The USD/JPY is trading at 146.88, below its opening price by 0.02%.

On Thursday’s session, the USD/JPY surprisingly edged higher despite verbal interventions by Japanese authorities. In the Asian session, Japanese Finance Minister Shunichi Suzuki commented that he’s worried about recent forex volatility involving the JPY while saying that authorities are focused on FX volatility rather than the USD/JPY exchange rate.

Therefore, USD/JPY traders perceived that as a green light, so the pair surrendered the 147.00 figure.

USD/JPY Price Forecast

The USD/JPY daily chart confirms the pair as upward biased, though price action is beginning to flash signs that it’s overextending. The major printed a daily high at around May 1998 high of 147.67, but the USD/JPY retraced towards current exchange rates on worries of another intervention in the FX markets. USD/JPY traders should know that a break above 147.67 would open the door toward 150.00.

The USD/JPY, one-hour time frame, suggests the pair tested the R1 daily pivot at 147.38 four times, while the Relative Strength Index (RSI) printed a lower high, suggesting that a negative-divergence formed, sending the USD/JPY sliding from the daily high of 147.62 to the 20-EMA at 146.93. That means that as the exchange rate rose, sellers were gathering momentum.

Additionally, the RSI is accelerating toward crossing the central line, further cementing the case for a correction. Therefore, the USD/JPY first support would be the confluence of the 50-EMA and the daily pivot at around 146.49/57. Break below will expose the confluence of the 100-EMA and the S1 daily pivot point at 146.01/06, followed by a fall to the 200-EMA at 145.35.

USD/JPY Key Technical Levels