The USD/JPY pair jumped on Tuesday as short-term risk appetite was hit by renewed tensions in the Middle East pushing the price to the upper side of a narrow near-term range (158.80/159.35).
The move remains well supported by a thick daily Ichimoku cloud (top of the cloud is at 158.85), as well as bullish daily studies (positive momentum strengthening/multiple bullish DMA crossovers) that keep the near-term focus on the upside at the moment.
On the other hand, traders remain very cautious, keeping the price within a narrow range for a few days, as the pair approaches the 160 level, where the Japanese authorities intervened on April 30, while not ruling out another measure to strengthen the weak currency.
In such an environment, the near-term trend remains unclear, with rapid changes in the risk profile from the situation in the Middle East, adding to the current picture.
However, the expected impact from the bearish intervention and divergence on the daily stochastic indicates that the downtrend remains at risk, with a cautious selling scenario (accompanied by close stops) being the preferred scenario in the near term (violating the top of the cloud to generate a bearish signal).
Accuracy: 159.30; 159.85; 160.00; 160.45.
SOP: 158.80; 158.55; 158.30; 157.87.
