• USD/JPY climbs over 180 pips, testing key resistance at 142.35 (Tenkan-Sen).
• A break above 143.04 could target resistance at 143.15 (Senkou Span A) and 144.48 (Kijun-Sen).
• A drop below 142.00 could see the pair resume its downtrend, with support at 139.58 (YTD low) and 139.00.

The USD/JPY skyrocketed late in the North American session, trading at 142.44, up by over 1% after bouncing off a daily low of 140.32. Solid US data added to investors' uncertainty about the size of a Federal Reserve rate cut as they eyed its monetary policy decision on Wednesday. Therefore, traders shorting the US Dollar trimmed their positions, as seen as price action in the USD/JPY pair.

USD/JPY Price Forecast: Technical outlook

From a technical perspective, the USD/JPY is still downward biased despite rising over 180 pips to test the Tenkan-Sen at 142.35. The Relative Strength Index (RSI) remains bearishly biased, though aimed up, but has turned flat as Wednesday’s Asian session looms.

If USD/JPY climbs above the September 12 daily high of 143.04, this could pave the way for a leg-up, exposing key resistance levels: the Senkou Span A at 143.15, followed by the Kijun-Sen at 144.48.

However, if USD/JPY drops below 142.00, it will exacerbate a resumption of the downtrend. The following support would be the year-to-date (YTD) low of 139.58, followed by the 139.00 mark.