The US dollar made an initial attempt to rally during Monday's trading session but quickly retraced its gains. This suggests that a pullback may be on the horizon, creating an opportunity for value hunting. The 50-Day Exponential Moving Average located just below the ¥141 level is expected to provide support, and the presence of a bullish flag formation in the same area further reinforces this possibility.
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Considering the bullish flag pattern, the market is likely to continue its upward trajectory based on the measured move. However, a significant fundamental catalyst is required for a sustained turnaround. While the Federal Reserve is expected to continue tightening monetary policy, concerns remain regarding the duration of their approach.
A breakout above Monday's candlestick high opens up the possibility of a move towards the ¥145 level. This level holds psychological significance and is likely to provide some resistance. However, a successful break above ¥145 could pave the way for a further climb towards ¥150. Conversely, if the market breaks below the 50-Day EMA, it could lead to a move down to the top of the ascending triangle around the ¥138 level. A breach of this level would indicate a major trend change. However, unless the Federal Reserve explicitly announces a shift in their stance, such a scenario appears unlikely.
- It is expected that the market will recover. However, it would be prudent to wait for a bounce or the formation of a supportive candlestick before entering a position.
- The preferred approach would involve waiting for a short-term bounce that presents an opportunity for traders to capitalize on.
- The interest-rate differential between the US dollar and other currencies will likely incentivize traders to hold this currency pair.
The US dollar experienced an initial rally during Monday's trading session but quickly retraced its gains, indicating a potential pullback in the market. The ¥141 level, supported by the 50-Day EMA, is expected to provide a solid support zone. The presence of a bullish flag pattern reinforces the likelihood of continued upward movement. However, a fundamental catalyst is needed for a sustained turnaround. Resistance levels at ¥145 and ¥150 may temporarily impede the market's progress. A breakdown below the 50-Day EMA could trigger a move towards the ¥138 level, but a major trend change would require a specific announcement from the Federal Reserve. Traders are advised to wait for a bounce or supportive candlestick before initiating positions. Given the interest-rate differential, the market is expected to maintain its bullish bias.
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