Buying USD/JPY Again After the Bullish Reversing Pattern
The JPY is a safe haven asset, which means that it should decline during periods of positive risk sentiment and increase during periods of negative risk sentiment. But, it has been crashing lower since the beginning of March when the “conflict” in Ukraine started and the sentiment turned really negative.
That’s because most major central banks have started raising interest rates and are planning more hikes this year, while the Bank of Japan hasn’t been thinking about it, mostly because inflation hasn’t increased much in East Asia, while it keeps surging in Europe and the western countries mostly. The USD on the other hand, has been bullish until some time last month, so USD/JPY surged above 1.31 early in May.
USD/JPY H1 Chart – Bouncing Off the 20 SMA
USD/JPY is resuming the bullish trend again
During most of May, the USD retreated lower which sent this pair lower as well, but the bullish momentum resumed again and yesterday USD/JPY pushed above 130 again. Earlier today we saw another retreat and the price slipped below 130 but the 50 SMA (yellow) held as support on the daily chart. The price formed a small doji on the H1 chart above that moving average which is a bullish reversing signal and we decided to open a buy forex signal.
Now the price has bounced higher again, resuming the uptrend, which means that it is heading for our taker profit target. The ADP employment report from the US for May showed a slow-down, but this pair is keeping the bullish momentum despite that.
ADP May US Employment Report
- Prior was +247K (revised to +202K)
- Small -91K
- Midsized +97K
- Large +122K
- Goods producing +24K
- Service providing +104K
This is a tad on the soft side with construction and information jobs among the negative sectors. The market isn’t at all worried about employment and a bit of softening will ease the pressure on wages and prices.
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