USD/JPY could climb higher if the Fed maintains an aggressive stance
The realization of the investment pattern on the daily chart indicates that the correction of the USD/JPY pair for a new 32-year high (151.94) is complete (after a limited reaction to the last intervention when Japan distributed a record amount to support the yen’s forex business), as the strong rally lasts the next day.
Bulls with a more than 50% lag from the yield of 151.94/145.10, added to a renewed futures house position, signaled by the return of the daily moving average to a full house setup and increasing positive momentum.
A close of the pair USD/JPY above 148.52 (50% Fibonacci retracement of 151.94/145.10, reinforced by daily Tenkan-sen) has generated a new bullish signal and would keep the recovery on track for the test of 149, 33 (Fibo 61.8%) and the barrier of 150.
Fundamentals are also working in favor of the US dollar, as the expect a further 75 basis point hike from the Fed on Wednesday and expect the central bank to maintain a hawkish stance towards a 5% terminal rate. awaits your first trimester of 2023.
One scenario would inflate the dollar’s advantage over forex and pave the way for further advance, exposing the Fibo projections at 153.55 (123.6%) and 154.55 (138.2%) initially.
Resistance levels: 149.33; 150.00; 151.94; 153.55
Assistance levels: 148.29; 147.37; 146.20; 145.10
By Slobodan Drvenica, Director of Information and Analytics at Windsor Brokers
An industry veteran with over 22 years of experience, Slobodan Drvenica joined Windsor Brokers in 1995 and has now been an active trader for 10 years, managing the trading desk and own account departments. For the past decade, he has headed the analysis department and specialized in devices and raw materials.
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