During the Asian session on Wednesday, USD/JPY was trading around 151.20, experiencing a retracement from its annual high reached in the wake of the Bank of Japan's (BoJ) decision to eliminate the 1% ceiling for the 10-year government bond yield the previous day. This move in the pair was triggered by the BoJ's modification of the yield curve control (YCC) strategy. BoJ Governor Kazuo Ueda conveyed a notably dovish sentiment following this adjustment, voicing concerns about inflation failing to definitively reach the central bank's long-term targets.
USDJPY Price Action
In general, USDJPY maintains a bullish trajectory. When scrutinizing the Ichimoku indicator, both the Tenkan sen and Kijun sen lines are positioned above the cloud, signifying a bullish trend. Additionally, the chikou line remains above the highs from the previous 26 days/periods, further corroborating the bullish sentiment. Nevertheless, despite the overarching bullish trend, the current price has dipped below the Kijun line. This event suggests a bullish correction or pullback, potentially making it a favorable proposition to consider buying on market weakness.
The MACD indicator aligns with this notion of a pullback. While both the histogram and the signal line continue to stay above the 0 line, signifying an overall bullish trend, the histogram now resides below the signal line. This alignment underscores the presence of a micro-trend representing a bullish correction.
The RSI momentum indicator (with a 14-period setting) also aligns with the bullish outlook. However, it's crucial for this indicator to remain above the 40 mark to maintain its bullish momentum. A drop below 40 could indicate the emergence of a bearish trend.
The lower segment of the value area, marked in pink and plotted on the volume profile indicator, serves as a key support level. As of now, the price is above this value area, indicating a bullish sentiment. However, if the market descends below it, this could signify a shift towards a bearish trend.
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forex, technical analysis, trading indicator, fundamental analysis