Baxia Markets
June 09, 2023

US Dollar Continues to Look for Higher Levels Against the Yen

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In early Monday trading, the US dollar exhibited a strong rally against the Japanese yen, which has been experiencing a decline in value. However, traders have encountered some resistance around the ¥140 level, necessitating close attention. It is important to note that this level has been breached in the past, indicating that a breakout above the recent high is imminent. Such a breakout would likely propel the market to higher levels, with a potential target of ¥148 based on a previously identified ascending triangle on the chart.



While an immediate move to ¥148 is unlikely, it is advisable not to hastily enter the market. Nevertheless, we maintain a bullish outlook and firmly believe that it is only a matter of time before the broader market follows suit. However, it is crucial to consider the inherent volatility associated with this currency pair when establishing a position. Proper position sizing is of utmost importance, and clarity in the market will eventually emerge. Once a breakout above the recent high occurs, the next target is likely to be around ¥142.50.


USD/JPY traders waiting for a pullback

In the event of a market retracement, the top of the previous consolidation triangle can be found around the ¥138 level, which presents a potential area of value to closely monitor. While we do not anticipate a decline to that level, if it does occur, we would be particularly interested in observing any supportive candlestick patterns or signs of a possible bounce. Furthermore, the 50-Day Exponential Moving Average is approaching that area, adding further significance to its potential as a turning point. The convergence of these factors suggests that they may intersect in due course, although the question remains whether it will happen closer to the ¥138 level or at a later stage. If such a significant pullback occurs, it would certainly catch the trader’s attention.


In summary, the US dollar showed a strong rally against the Japanese yen in early Monday trading. The market faced resistance around the ¥140 level, requiring careful observation. A breakout above the recent high is expected, which could potentially drive the market towards ¥148 based on a previously identified ascending triangle. While an immediate move to ¥148 is unlikely, a bullish outlook remains. Traders should remain aware of the inherent volatility of this currency pair and exercise proper position sizing. The ¥138 level represents a potential area of value, but the timing of the market's convergence with that level remains uncertain.

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