Relevance up to 10:00 2022-06-17 UTC–4
In the early American session, USD/JPY is back in the negative zone, trading at 134.40 and around 7/8 Murray. The bias remains bullish although with some signs of exhaustion.
After reaching a high of 135.19, the Japanese yen recovered to reach 133.58. It is currently consolidating at 134.40. The price has been testing this level since June 06, forming a key level to be considered.
The renewed rise in the USD/JPY pair was triggered by rising US Treasury yields, which sent the US dollar higher at the same time.
The dollar returned to the level of 105.04 and the yen at 135.19. This was caused by the increase in fears about inflation and its impact on the US economy in case the Federal Reserve opts for a quick and higher rate hike to contain the rise in prices.
The accelerated weakness of the USD/JPY pair is putting the country’s economy at risk. The head of the Bank of Japan, Haruhiko Kuroda, has said that the recent fall of the yen to the levels of 2002 is undesirable and not good for the recovery of the economy.
According to the 4-hour chart, we can see the formation of a symmetrical triangle that the yen has been trading within since last week. A sharp break of this technical pattern and a daily close below the 21 SMA located at 134.25 and below 7/8 Murray could be a clear signal to sell, and there could be an acceleration to the downside towards 6/8 Murray located at 131.25.
Since June 8, the eagle indicator is giving an extremely overbought signal, and it is likely that the market could make a technical correction towards the 200 EMA located at 129.70.
Our trading plan for the next few hours is to sell if the yen consolidates below 134.37, with the targets at 134.00, 133.20, and 131.25.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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