Gains Momentum, Signals Positive Outlook

The broader market context supports the expectation of further upside potential, making buying dips an appealing strategy. 

• During Thursday’s trading session, the USD/JPY experienced a modest rally, indicating sustained upward pressure and a positive outlook for the currency.
• The market has finally breached the ¥142.50 level, representing a previous swing high and highlighting efforts to gather sufficient momentum for a significant move.
• Notably, the recent breakout of a bullish flag pattern and an ascending triangle pattern further strengthens the optimistic sentiment, suggesting the potential for the USD/JPY pair to reach or surpass the ¥148 level.

A closer examination of the chart reveals the ¥138 level as a significant resistance point. This level, having served as strong resistance in the past, holds notable importance due to its impact on market sentiment. It coincides with the lower boundary of the bullish flag pattern, further underlining its potential as a crucial support level. A break below this level would likely trigger substantial selling, particularly considering the presence of the 50-Day Exponential Moving Average nearby.

The broader market context supports the expectation of further upside potential, making buying dips an appealing strategy. The longer-term perspective also suggests the possibility of a significant move, with a potential target of ¥148 based on the bullish flag pattern. Additionally, the Bank of Japan’s commitment to maintaining loose monetary policies aligns with this bullish outlook. Even if the Federal Reserve decides not to raise interest rates in the upcoming meeting, the substantial interest rate differential between the US dollar and the yen remains advantageous, serving as a strong driving force for this market.

The US dollar’s rally against the yen continues, with the market steadily approaching and eventually taking out the ¥142.50 level. The breakout of the bullish flag pattern and the presence of an ascending triangle pattern further reinforce the positive outlook. Notably, the ¥138 level assumes significance as a resistance-turned-support level due to its impact on market sentiment. A break below this level could trigger substantial selling. Looking at the broader picture, the longer-term perspective indicates further upside potential, supporting a strategy of buying dips. The Bank of Japan’s commitment to ultra-loose monetary policies adds momentum to this trade. Regardless of the Federal Reserve’s upcoming interest rate decision, the substantial interest rate differential between the US dollar and the yen remains a significant driver in this market. Traders are advised to remain attentive to potential buying opportunities, particularly during dips, while keeping an eye on the ongoing bullish momentum in the USD/JPY pair.

Ready to trade our Forex daily forecast? We’ve shortlisted the top forex brokers in the industry for you.