USD/JPY Technical Analysis: Positive Performance Ahead of Important and Influential Data

• Analysis of the dollar against the yen USD/JPY and its positive performance ahead of important and influential data for four consecutive trading sessions.
• The exchange rate of the USD/JPY currency pair is moving in an upward retracement range, with gains that reached the 132.88 resistance level, which is stable near it at the time of writing the analysis.
• This happened before announcing a package of important US economic data that affects the expectations of raising interest rates from the Federal Reserve and, accordingly, the US dollar pairs.

The dollar-yen (USD/JPY) exchange rate rose sharply in the middle of the week's trading, rising nearly 150 pips. Commenting on that. Matthew Wheeler, the analyst at FOREX.com, says that the next levels of resistance to watch will be at 132.850 and 135.00 if the rise extends in the near term. From a bigger-picture perspective, it is not hard to see why the Japanese yen is suffering in the current environment.

After all, outside of the Bank of Japan (BOJ), every other major central bank has aggressively hiked rates over the past year, and even the BoJ's new president, Kazuo Ueda, shows no signs of that changing anytime soon. Likewise, the Japanese economy remains in a moribund state, suffering under the weight of spiraling demographics, mounting debt, and a lack of innovation.

Be that as it may, the Japanese Yen showed a historically strong tendency to rise in the last week of March. Japan's fiscal year ends on March 31. Japanese multinational corporations tend to return their dividends around that time of the year so they can pay taxes, creating marginal buying pressure on the nation's currency. Likewise, the act of paying taxes removes the yen from circulation, at least temporarily, causing less supply and more demand at this time of year.

Against this background, the fact that the Japanese yen is the weaker major currency of the day and week is especially important. This means that the factors that led to the weakening of the Japanese yen may have a stronger effect on any other week. Of course, the fiscal year isn't over yet, so it's worth keeping an eye on USD/JPY strength through the rest of the week, but as it stands, the yen's price action this week offers a strong signal given the seasonal backdrop.

USD/JPY Technical Outlook:

In the near term, the USD/JPY pair broke the short-term descending triangle pattern, which could open the door for an extended rise from here. There is also the possibility that Friday's low may mark a "higher high" for the pair, signaling a potential end to a medium-term downtrend away from last October's high.

The next level to watch would be the 21-day moving average near 132.80, with a break above this level paving the way for a potential continuation toward the mid-March highs of 135.00 after that. Meanwhile, a reversal downwards in the channel would erase the bullish bias in the near term and could herald a retest of the 10-month lows near 128.00 in due course.