USDJPY testing major resistance

USDJPY pair erased early losses and is moving higher as investors digested fresh figures which showed Japan’s unemployment rate lowered slightly in November, while retail activity in the country grew less than expected. Also recent comments from BoJ Governor Haruhiko Kuroda weighed on yen. Kuroda pushed back against speculations that the central bank would soon abandon its ultra-loose monetary policy following a surprise adjustment to the 10-year yield target last week. Kuroda said “the Bank will aim to achieve the price target in a sustainable and stable manner, accompanied by wage increases, by continuing with monetary easing under yield curve control.” He added that Japan’s labor market conditions, particularly for non-regular employees, are projected to tighten further. 

From technical point of view, USDJPY pair is currently testing major resistance at 133.10, which is marked with previous price reactions and 38.25 Fibonacci retracement of the upward move started in January 2021. Should a break higher occur, upward move may accelerate towards the upper limit of the descending channel. On the other hand, if sellers manage to regain control, retest of the support at 130.60 cannot be ruled out.