USD/JPY Above 140 Again, After Retreat Ends Short of Expectations

The retreat in USD/JPY is now over and buyers are back in control, as the 20 daily SMA turned into support

USD/JPY is back to 141 pretty fast

USD/JPY has been bullish since the beginning of the year, and after two failed attempts at the 200 SMA (purple) on the daily chart, buyers managed to break above that moving average and pushed the price close to 141 in late May. At the end of last month we saw a lower retreat, and I thought the price might reach the 200 SMA, which would turn into support now. That would be an excellent place to open a long-term buy USD/JPY signal.

But the US Dollar quickly recovered after the brief decline, with USD/JPY exemplifying the volatility in the forex market in recent weeks. This pair experienced a consistent decline last week, but reversed course and surged to close above 140 yesterday. What has made trading challenging is that any significant fundamental news triggered none of these moves.

The Bank of Canada’s rate hike yesterday which followed the other surprise hike by the RBA on Tuesday may have prompted market participants to increase the probability of a hike by the Federal Reserve. However, at the same time, the rate hikes by the Bank of Canada and the Reserve Bank of Australia are likely to have a disinflationary impact on global pricing. This, in turn, could make it easier for the Federal Reserve to maintain its current stance and hold from raising rates again this month.

Fixed income markets, particularly global yields, could be a driving force behind these currency movements. Yields have been rising globally, including in the United States, where 10-year yields have increased by 6.8 basis points, reaching a high of 3.76%.

So, buyers are in charge in this pair at the moment and the dips keep getting smaller, which confirms just that. The last dip ended as soon as the 20 SMA 9gray0 caught up with the price and USD/JPY reversed higher, resuming the uptrend. Now the next target comes below 141 which was the high last week, so we will observe the price action as it moves higher.

USD/JPY Live Chart 

USD/JPY
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

Related Articles

Comments

0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

HFM

Doo Prime

XM

Best Forex Brokers