- The US dollar made an initial upward move in Wednesday's session against the Japanese Yen, suggesting the formation of a potential basing pattern. Notably, the ongoing uptrend line underneath remains intact, and the 141 Yen level appears to act as resistance.
- The presence of the 200-day Exponential Moving Average (EMA) above may also serve as a barrier, limiting potential upside in the short term.
- However, the outlook for breaking above these levels likely hinges on the performance of the bond market.
The 10-year yield holds significant sway over this currency pair. A break above the 10-year yield could open the door to a move towards the 145 yen level, which represents the next potential hurdle. Additionally, this aligns with the location of the 50-day EMA. If these levels are successfully breached, it could signal readiness for a more substantial upward movement, particularly in a longer-term buy-and-hold context.
Volatility, as per…
The USD/JPY pair is renowned for its inherent volatility, and this characteristic continues to define its behavior. It's crucial to bear in mind that the upcoming jobs report on Friday will exert its influence on the pair. Typically, during and immediately after this announcement, the USD/JPY pair experiences heightened volatility.
This scenario sets the stage for potential fluctuations, requiring traders to navigate through market noise to secure profits. Conversely, if the 141 yen level, or even the 140 yen level, is breached on the downside, it could lead to a substantial decline, potentially reaching the 135 yen level more rapidly than anticipated. Presently, the pair appears to be striving to maintain support from a longer-term perspective.
At the end of the day, the US dollar exhibited an initial upward movement against the Japanese Yen on Wednesday, suggesting the emergence of a potential basing pattern. The prevailing uptrend line remains intact, with resistance seen at the 141 yen level and the 200-day EMA. The outlook for breaking above these levels is closely tied to developments in the bond market, particularly the 10-year yield. Overcoming these barriers could lead to a move towards the 145 yen level, accompanied by the 50-day EMA, indicating readiness for a more substantial upward trajectory. The inherent volatility of the USD/JPY pair, exacerbated by the upcoming jobs report, underscores the need for traders to navigate through market noise. Conversely, a breakdown below key support levels could trigger a rapid decline, possibly reaching the 135 yen level sooner than expected. Currently, the pair seems to be holding support from a longer-term perspective.
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