The USD/JPY moved higher going into the weekend, and in early trading this morning the currency pair sustained its upwards momentum.
The USD/JPY is trading near the 136.250 mark as of this writing; this after the currency pair touched the 136.525 ratios on Friday. The ability of the USD/JPY to maintain this higher price range should create a sincere amount of nervousness among speculators who have held onto their bearish outlooks. The currency pair has demonstrated a solid buying trend since the 2nd of February.
The USD/JPY is testing values not seen since the middle of December, and not so long ago the currency pair was trading at much higher values in early December and November. This should be used as a warning to traders who do not believe higher realms can be attained. The USD/JPY has a history of creating strong trends, which can cause plenty of pain if they are mishandled by speculators who believe they know better than what the Forex market is telling them via posted values.
USD/JPY Affected by Stubborn U.S Economic Data and Federal Reserve Outlook
The USD/JPY was trading near the 128.000 mark in early February. However, rather aggressive rhetoric from the U.S. Federal Reserve regarding monetary policy and confirmation of stubborn inflation has changed the direction of the USD/JPY. The Bank of Japan has maintained its dovish stance as the U.S. Fed has remained hawkish. These two clashing reactions and differences in outlook regarding global economic issues have created more buying in the USD/JPY the past week.
If the USD/JPY remains above the 136.000 level in the short term this could be significant additional buying that may creep into the Forex pair. The U.S. will see the CB Consumer Confidence reading late tomorrow and if it is stronger than expected, it could spur on more bullish sentiment. The U.S. Federal Reserve seems to be in a position that will force them to raise interest rates over the next few months, certainly more than what had been anticipated late in January.
The USD/JPY Needs to be Handled Carefully by Speculators
If the USD/JPY is able to sustain its higher price range in the near-term, technical traders cannot be blamed for believing the 136.400 to 136.600 ratios can be quickly tested. The USD/JPY has a habit of moving extremely quickly and solid risk management is always needed when pursuing the currency pair.
- Buying the USD/JPY after moves lower which tests short-term support levels may be used as speculative betting ratios to look for upside by bullish traders.
- The near-term is unlikely to produce impetus which will make the USD/JPY have a sustained bearish price move. However, traders must always be ready for volatility from the currency pair.
USD/JPY Short-Term Outlook:
Current Resistance: 136.495
Current Support: 136.125
High Target: 136.890
Low Target: 135.775
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