Weekly Analysis: USDJPY Bullish on Ascending Triangle Breakout
On weekly chart, the USDJPY continues soaring after a bullish breakout from a long term ascending triangle formed since 2022. The bullish breakout occurred on 10th of April when the pair decisively pierced above the 152 resistance zone, and the breakout with an upside target of 176 (measured by triangles height) remains valid as the subsequent weeks continued closing higher beyond 152.
While BOJ had already exited from its negative interest rates policy, the interest rates differential between USD and JPY remains jarringly wide. The movement of USDJPY is largely dependent of the USD strength, with recent sticky inflation data, the Fed is expected to push back on its interest rates cut, which means that the yield spread in USDJPY is to remain higher for longer, favoring the greenback against the yen. In the short term however, given the sharp and rapid depreciation of the yen, traders should be cautious of a potential FX intervention by the BOJ, which would trigger a whipsaw (suspected to have taken place on 29 April after the sharp spike to 160). In the intermediate term, the fundamentals are aligned for further appreciation of the USDJPY pair.
This broad uptrend in the USDJPY offers short-term traders opportunities to capitalize on short-term price swings by aligning their trades with the overall bullish momentum. They can use technical analysis tools to identify entry and exit points within the uptrend, potentially profiting from smaller price movements.
While BOJ had already exited from its negative interest rates policy, the interest rates differential between USD and JPY remains jarringly wide. The movement of USDJPY is largely dependent of the USD strength, with recent sticky inflation data, the Fed is expected to push back on its interest rates cut, which means that the yield spread in USDJPY is to remain higher for longer, favoring the greenback against the yen. In the short term however, given the sharp and rapid depreciation of the yen, traders should be cautious of a potential FX intervention by the BOJ, which would trigger a whipsaw (suspected to have taken place on 29 April after the sharp spike to 160). In the intermediate term, the fundamentals are aligned for further appreciation of the USDJPY pair.
This broad uptrend in the USDJPY offers short-term traders opportunities to capitalize on short-term price swings by aligning their trades with the overall bullish momentum. They can use technical analysis tools to identify entry and exit points within the uptrend, potentially profiting from smaller price movements.
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