USD-JPY PRICE FORECAST: USD-JPY STICKS TO OKAY PROFITS, BULLS ANTICIPATE A MOVE YONDER MID-109.00S

The fresh surge in USD-JPY seems to be delaying as it brawls to range the sequence of higher highs and lows succeeding the Fed interest rate decision, but the new regaining in the exchange rate eliminates the risk of a head-and-shoulders development as it breaches the left shoulder.

USD-JPY RATE RECOVERY ELIMINATES RISK OF HEAD-AND-SHOULDERS DEVELOPMENT

In a fresh speech, New York Fed President John Williams warns said that “we still have a lengthy way to go to realize a healthy and full economic recovery,” with the perpetual voting-member on the FOMC going onto say that the “healthy economic development this year by itself isn't sufficient to accomplish the very durable and full economic turn-around that we are aiming for.”

Consequently, Williams stresses that “it's significant not to overreact to this instability in prices ensuing from the unique situations of the covid19,” and it appears as though the Federal Reserve is in no haste to gauge back its emergency actions as “the statistics and circumstances we are witnessing now are not nearly adequate for the FOMC to change its monetary policy posture.”

The remarks recommend the Fed will hold on to a wait-and-see tactic as the central bank cautions of a fleeting increase in inflation.

Till then, USD-JPY may remain to study the swings in long-dated US yields though the FOMC remains on track to “surge our holdings of Treasury securities by a minimum of $80 billion per month,” but the current increase in the exchange rate may continue to overlap with the changed in retail sentiment as the flocking behavior from 2020 resurfaces.

TECHNICAL ANALYSIS

With that said, the plunge from the March high - 110.97- might reveal to be a retracement instead of a variation in trend as the crowding behavior from 2020 remerges, and the fresh retrieval in the exchange rate eliminates the threat of a head-and-shoulders development as it breaks above the left shoulder.

The Relative Strength Index (RSI) displayed a similar dynamic as the indicator scaled above 70 for the first time since February 2020, but the resistance from overbought territory has annulled the bullish trend from this year, with USD-JPY plunging below the 50-Day SMA (108.71) for the first time since January.

However, USD-JPY seems to have an upturned course in advance of the March low -106.37- as it trades back above the 50-Day SMA -108.71-, but need a break-close above the Fibonacci overlap around 109.40 (50% retracement) to 110.00 (78.6% expansion) to unleash the March high (110.97).

A breach above the March high (110.97) unlocks the intersection around 111.10 (61.8% expansion) to 111.60 (38.2% retracement), with the subsequent area of attention coming in around 112.40 (61.8% retracement) to 112.50 (38.2% retracement).

The short-term view for USD-JPY is bearish, with room for a sharper down ride once below the 108.70, the direct support level. In the 4-hour chart, the duo is hurrying its weakening below its 20 and 200 SMA, which nevertheless lack steering forte.