• USDJPY surpasses key resistance, but more steps needed

• Short-term risk tilted to the upside; 157.00 mark under examination

• US S&P Global PMIs, initial jobless claims, new home sales on the agenda

USDJPY closed Wednesday’s session with modest gains at 156.75 as the FOMC minutes highlighted worries about inflation and disagreements among policymakers on the timeline of monetary easing.

The soft bullish move was enough to drive the price above the short-term resistance line drawn from April and therefore boost optimism for a continuation higher, but there are a couple of obstacles which could still stop the rally.

Specifically, the 23.6% Fibonacci retracement of the latest upleg near 157.00 and April’s border of 157.83-158.40 are within breathing distance and overlap with the broken support trendline from March. The bulls must breach the latter in order to advance towards the 2024 resistance line seen near 160.00. Even higher, the pair could target the critical trendline area of 162.83.

In trend signals, the positive gap between the shorter- and longer-term simple moving averages (SMAs) is currently endorsing the ongoing upward wave. The momentum indicators are favouring the bulls too, with the RSI fluctuating comfortably above its 50 neutral mark , the stochastic oscillator bouncing up again, and the price itself hovering within the bullish upper Bollinger area.

However, if the price drops below its 20-day SMA and the descending line at 155.80, traders may start selling, pushing the price into the 153.00-153.60 range. This is where the 50-day SMA, the 50% Fibonacci level, and two critical constraining lines are placed. Hence, a close lower could confirm another leg down to the 61.8% Fibonacci of 151.70. In the event that the bears claim dominance over the floor, the short and medium-term outlook could deteriorate, resulting in a possible decline towards the 149.40-150.00 region, where the 200-day SMA and 78.6% Fibonacci number converge.