Is the trend still our friend on USD/JPY?
This forex pair seems to be in the middle of a correction, so I’d watch out for a potential bounce off these support levels.
USD/JPY 1-hour Forex Chart by TradingView
I’m seeing higher lows and higher highs on the hourly chart of this one!
Will the uptrend resume soon?
It looks like the 38.2% Fibonacci retracement near the mid-channel area of interest is attracting some buying interest. If so, this might be enough for USD/JPY to recover to its swing high around 134.00 or the channel resistance.
Moving averages are reflecting the presence of bullish vibes after all, as the 100 SMA is above the 200 SMA and appears to be holding as dynamic support.
However, Stochastic still seems inclined to head lower, suggesting that a larger correction is possible. In that case, the pair might dip to the 50% Fib at 132.38 or the 61.8% level near the 132.00 handle.
Dollar weakness has been the name of the game over the past few trading sessions, especially since the U.S. CPI report turned out weaker than expected.
To top it off, the March FOMC meeting minutes contained plenty of concerns about the U.S. banking sector and the potential impact of the liquidity crunch on overall economic activity.
All these have been enough to dampen Fed tightening hopes for the next few months, although many still believe that a 0.25% hike is in the cards for May.
In contrast, the BOJ has confirmed plans to keep its loose monetary policy in place, as reiterated by new Governor Ueda in a recent testimony.
With that, the path of least resistance for USD/JPY based on policy biases might stay to the upside. Just watch out for the U.S. PPI and retail sales figures coming up soon!
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