It is interesting for investors to observe the price movement on the chart of the USD/JPY currency pair during the last week's trading.
The price level of 134.00 became a resistance that failed to be crossed with the price moving in a range from that height up to the support level at 132.00.
The US dollar moved weakly last week as the market received clearer signals based on the release of US inflation data which is seen to encourage the Federal Reserve (Fed) to slow down monetary policy.
However, after the price dropped at the 132.00 level, there was a price rebound at the end of the week with the expectation of profit taking activities in addition to the hawkish statement by the Fed Governor, Christopher Waller, who supported continued policy tightening.
Also supporting the upward movement in prices is the depreciation of the Yen currency when the market received a dovish signal by Bank of Japan (BOJ) Governor Kazuo Ueda who is seen to still maintain a loose monetary policy.
Thus, this is seen to continue to push the Yen to move weakly for the next several periods.
The price rally at the end of last week that moved back above the Moving Average 50 (MA50) level on the 1-hour time frame suggests that the bullish pattern will continue this week.
The price movement at the beginning of the week was slow in the 134.00 zone which became an important resistance for prices to break through.
If the rise continues, the price will record the latest 5-week high with a target seen at 135.00.
But if the price instead plunges again, the MA50 support level will be tested before the price extends the decline to 132.00.
Breaking lower will push the price down to around the 130,700 concentration zone which was previously also a support zone for the price.
