The US dollar is holding up against the Japanese yen currency as the recovery in the greenback gathers pace after the recent better than expected nonfarm payrolls jobs report.
As the USDJPY pair continues to rise traders are not looking towards central bank intervention from the Bank of Japan unless the pair starts to head back towards the 150.00 level.
The reason that we are currently seeing some strength in the dollar against the yen is due the difference in two central banks, namely the Bank of Japan and the Federal Reserve after the latest 75 basis point hike.
Last week’s jobs report highlighted that the Fed are just going to keep the foot on the rate hike pedal with a 50 or 75 basis point hike in December. While the Japanese central bank stay put.
With the USDJPY pair at sitting close to the 147.00 level it may take a Republican win to sink the greenback as trader start to price in a change in monetary policy.
The key takeway this week is watch out for midterm election result and the outcome of the CPI report. The Japanese central banks probably won’t tolerate the 150.00 level if the greenback rises.
According to the ActivTrader Market Sentiment tool some 90% of traders are bearish towards the USDJPY pair, which strongly hints that more gains are coming.
I suspect until we see the retail traders or participants starting to turn bullish again we are probably going to see the USDJPY just heading higher if the 147.00 level becomes no problem for bulls.
USDJPY Short-Term Technical Analysis
Technical analysis on the four-hour time frame shows that the USDJPY pair has nearly moved towards the bottom of a huge triangle pattern between the 145.00 and 152.00 level.
According to the overall size of the bearish pattern we could likely see a 700 point move to the upside if the USDJPY pair starts to settle around the highs of the year.
USDJPY Medium-Term Technical Analysis
The daily time frame is showing that the USDJPY pair has formed a large a large head and shoulders style pattern. These are amongst the most reliable bearish reversal patterns, and it has been invalidated.
According to the size of the price pattern we are likely going to see some type of range trading between the 140.00 and 150.00 levels.