USD/JPY reversing after the doji candlestick in January

USD/JPY Monthly Chart Pointing to A Bullish Reversal

Posted Thursday, February 16, 2023 by
Skerdian Meta • 1 min read

After the 40 pip surge until October last year on a very hawkish FED, USD/JPY reversed lower as the Japanese officials intervened in the forex market. The Bank of Japan (BOJ) also tweaked the monetary policy, which added further momentum to the JPY toward the end of last year, but they are not actually changing the policy, which remains accommodative and the JPY is looking weak again, while the USD is gaining momentum.

The US Dollar has managed a meaningful comeback and a bullish break which is shown on the DXY Dollar Index. For the moment, the floor in EUR/USD above 1.0650 is conspicuously holding up the market but that is under threat and USD/JPY will move higher with that.

It is important to consider that context when evaluating USD/JPY’s own progress above 134. So, with the BOJ remaining on hold, it seems appropriate to expect this pair to follow the US Dollar trend more or less, over the next few days, given the turn in sentiment for the USD.

This forex pair fell to 127 lows last month after two very big bearish candlesticks in November and December, but the decline stopped right at the 20 SMA (gray), which seems to have turned into support for USD/JPY . This moving average held and the price formed a doji candlestick in January, which is a bullish reversing signal after the retreat. This month, buyers have come back and we’re seeing the reversal take shape. So, we have shifted our bias to long for this pair and will try to pick retraces lower on the smaller timeframe charts.

USD/JPY Live Chart

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