Japanese Yen Toys with the Market as Ranges Break then Retreat. Where to for USD/JPY?


Japanese Yen, USD/JPY, US Dollar, BoJ, Ueda, Momentum – Talking Points

  • USD/JPY has steadied after testing increased floor
  • The BoJ is in a ‘do nothing’ mode and that would assist Yen
  • If the pattern is undamaged, will USD/JPY stretch increased?

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How to Trade USD/JPY

The Japanese Yen has been a thorn and a crown for merchants over the final week, offering each complications and bliss in a wild journey of worth motion.

The elementary backdrop for Japanese financial coverage stays unchanged for now regardless of Kazuo Ueda taking the reigns final month as the new Governor of the Bank of Japan (BoJ).

It seems that it’s a case of ‘steady as she goes’ for the technocrat and that could be simply what the job requires at a time when different central banks are trying to pause on their tightening stance.

The BoJ have a coverage price of -0.10% and they’re sustaining yield curve management (YCC) by focusing on a band of +/- 0.50% round zero for Japanese Government Bonds (JGBs) out to 10 years.

EUR/JPY placed on an astronomical rally and took out a number of earlier highs to make a 15-year peak earlier than collapsing again into the vary.

Meanwhile, USD/JPY lacked the momentum to mark new territory to the upside and failed to preserve the bullishness when it retreated again to acquainted ranges.

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The USD/JPY rally on Monday this week broke above the higher band of the 21-day easy shifting common (SMA) primarily based Bollinger Band. It then closed again inside the band to sign a pause in the bullish run and what turned out to be a reversal.

The focus going ahead is that the currency pair stays in an ascending pattern channel for now however is questioning the bullish momentum.

If USD/JPY closes beneath 132.50 it will likely be beneath all interval day by day SMAs and the constructive gradient pattern line. From a technical perspective, that would point out that vary buying and selling situations have been bolstered.

The worth motion this week has revealed 135.11 as a pivotal breakpoint and it could supply resistance. Further up, there are three earlier highs in the 137.77 – 138.17 space which may present resistance.

On the draw back, the prior lows at 133.50, 133.00 and 132.00 could lend help forward of the 129.50 – 129.80 potential help zone.

Chart created in TradingView


— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the feedback part beneath or @DanMcCathyFX on Twitter

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