Dollar Attempts to Break Consolidation Area in USD/JPY

The dollar pushed ahead early on Wednesday, breaking out of the week's trading range.

In early Wednesday trading, the USD/JPY pair gained traction as dollar bulls shifted gears. The U.S. dollar strengthened to levels near 131.80 after spending the previous four trading sessions near 131.00. Since early March, the pair has declined approximately 4.5%.

The yen declined after the Japanese government approved 2.2tn in reserve funds to combat escalating inflationary pressures. The USD/JPY pair has been in a downtrend market over the long term, falling from a multi-year high of 152.00 to levels near the 130.00 threshold.

On the technical front, the exchange rate is significantly below the 200-day moving average, an indicator of a bear market, according to analysts. The dollar rebounded from a long-term support line when it reached a low of 129.00 last week, indicating that a reversal may be imminent.