USD/JPY is slowly but steadily making higher highs!
I don’t know if you noticed, but USD/JPY recently broke above a weeks-long consolidation before making higher highs and higher lows on the 1-hour time frame.
And why not? Anticipation and then confirmation of a (still) hawkish Fed contrasted with the Bank of Japan (BOJ) sticking to its current policies despite higher wages and consumer prices.
The disparity between the Fed and the BOJ’s monetary policies gave market bulls the confidence to buy more USD against JPY.
USD/JPY 1-hour Forex Chart by TV
Since last week, USD/JPY has climbed from its 139.00 lows to trade closer to the 142.00 area.
In this setup, I’m looking at the most recent bounce from the 141.70 levels.
141.70 coincides with the 61.8% Fibonacci retracement of this week’s upswing!
More importantly, it’s close to the 1-hour chart’s 100 SMA as well as a trend line support that hasn’t been broken since last week.
Unless Fed Governor Powell wildly backtracks from believing that “Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” then the dollar could continue to gain against the yen.
USD/JPY, which is not too far from its weekly open prices, could extend its Fibonacci bounce and retest its previous highs near 142.40 if not the 142.50 psychological level.
I’m planning on placing my stops just under the 100 SMA and trend line support zone and will also consider scaling up if USD/JPY looks like it has enough momentum to hit the R1 (142.84) of the Standard Pivot Points.
What do you think? Will we see new monthly highs for USD/JPY in the next trading sessions?
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