- During Monday's trading session, the USD/JPY made a modest attempt at rallying against the Japanese yen.
- It is worth noting, however, that it was Juneteenth, a public holiday in the United States, which likely resulted in lower liquidity levels.
- Additionally, the market encountered resistance near the ¥142.50 level. Breaking above this barrier would pave the way for further upward movement, while a pullback could find significant support around the ¥140 level.
The recent breakout from a bullish flag pattern has attracted the attention of technical traders, generating interest in this currency pair. The prevailing sentiment suggests a buying strategy on market dips, with expectations of an eventual breach of the ¥142.50 level. The substantial interest rate differential between the two central banks, along with the Federal Reserve's relatively tight monetary policy stance, further supports the potential for upward movement. Despite the Bank of Japan's decision to refrain from an interest rate hike in its latest meeting, it has made clear its commitment to maintaining loose monetary policy.
Based on the measurement of the bullish flag pattern, it appears that this currency pair may aim for the ¥148 level in the future. Moreover, considering the breakout from the earlier ascending triangle pattern, the potential move could extend towards the ¥150 level. Pullbacks are expected to encounter significant support near the ¥138 level, which coincides with the top of the ascending triangle and aligns with the presence of the 50-Day Exponential Moving Average (EMA). This convergence indicates a potential robust support level in the market.
Pullbacks are Anticipated
At present, there is no interest in buying the Japanese yen, leading to a one-way trade perspective. This sentiment extends beyond this specific currency pair, encompassing multiple Japanese yen-related pairs. The ongoing market dynamics suggest continued interest in the upside potential of the US dollar against the Japanese yen.
Ultimately, the US dollar exhibited a modest rally against the Japanese yen in Monday's trading session, while liquidity constraints due to the Juneteenth holiday impacted market dynamics. Facing resistance near the ¥142.50 level, the currency pair's future movement hinges on breaching this barrier. Technical patterns and the substantial interest rate differential between the central banks support a buying strategy on market dips. Price targets, derived from the bullish flag and ascending triangle patterns, suggest potential moves toward the ¥148 and ¥150 levels, respectively. Notably, pullbacks are anticipated to find significant support near the ¥138 level, reinforced by the top of the ascending triangle and the 50-Day EMA.
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