Yen keeps posting flags through ascent
<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a> </strong></p>
<ul>
<li>USDJPY busy forming second flag since August, amidst year-to-date uptrend</li>
<li>JPY surged Monday after BoJ Governor Ueda offered hawkish policy clues</li>
<li>Yen bulls unable to build on Monday’s intraday low of 145.904.</li>
<li>USDJPY may look to close Monday’s gap down</li>
<li>Tomorrow’s US CPI to decide USDJPY’s immediate fate</li>
</ul>
<h3></h3>
<h3>USDJPY gapped down on Monday, September 11th’s market open.</h3>
<p>The Yen surged at the onset of the trading week after Bank of Japan governor Kazuo Ueda hinted at the possibility of a first rate hike in Japan since 2007!</p>
<p>The stronger Yen resulted in an <strong>intraday low of 145.904</strong> for USDJPY.</p>
<p>This FX pair closed Monday at a zone which could serve as a demand zone-base for a possible second flag, in its ascent from the lows of <strong>141.53</strong> printed on August 7th, 2023.</p>
<p>This close is also below the significant <strong>261.8 Fibonacci level </strong>when drawn from 134.772, January 6th high to the lows of 16th January 2023 at 127.224 on the weekly chart.</p>
<p><img decoding="async" loading="lazy" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/USDJPY%20-%20W1%20-%2012%20Sept%202023.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="4903bfaf-8c5b-41d3-b5cb-f4fe0a913607" data-src="/s3-static/users/user16/USDJPY%20-%20W1%20-%2012%20Sept%202023.png" /></p>
<p> </p>
<h3><strong>Attentions turn to the USD side of USDJPY, with the pivotal US consumer price index due to be released tomorrow (Wednesday, September 13th).</strong></h3>
<p>Both bears and bulls will be looking for price action around key levels for pointers to the next impulse direction for the USDJPY.</p>
<p><img decoding="async" loading="lazy" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/USDJPY%20-%20D1%20-%20flags%20-%2012%20Sept%202023.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="79a05cd0-7cb6-419f-87b6-f78eb8d1cce5" data-src="/s3-static/users/user16/USDJPY%20-%20D1%20-%20flags%20-%2012%20Sept%202023.png" /></p>
<p> </p>
<blockquote>
<h3><em>Bulls will be looking to close Monday’s open gap as they climb to the flag’s resistance around 147.769</em></h3>
</blockquote>
<p>They will however have to contend with the psychologically important Fibonacci level at 261.8 at <strong>146.985. </strong></p>
<p> </p>
<p><strong>A bullish flag breakout </strong>could see a test of the <strong>148.850 </strong>region which had resisted USDJPY bulls back in late-October/early-November 2022.</p>
<p>Further north, lies the potential resistance zone of the upward sloping channel drawn from January 5th, 2023.</p>
<p> </p>
<p><strong>USDJPY bears</strong> on the other hand will be looking for a <strong>strong close below</strong> the current bullish flag’s support, and also below the psychologically-important <strong>146.00</strong> line.</p>
<p>Such price action may indicate a reversion to its <strong>50-EMA </strong>which is below and more than 2600 points away from the current price at the time of writing.</p>
<p><img decoding="async" loading="lazy" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/USDJPYDaily_17.png" alt="" width="1024" height="768" data-entity-type="file" data-entity-uuid="af42a822-c518-49b0-ac75-6dcdfef70ae2" data-src="/s3-static/users/user16/USDJPYDaily_17.png" /></p>
<p> </p>
<blockquote>
<h3><em>Ultimately, much of USDJPY’s immediate fate should rest on tomorrow’s US inflation data release.</em></h3>
</blockquote>
<ul>
<li>A <strong>higher-than-expected CPI </strong>(consumer price index) that ramps up bets of one further Fed rate hike by end-2023 should bolster the US dollar and potentially <strong>send USDJPY higher.</strong></li>
<li>However, a <strong>lower-than-expected CPI</strong> that solidifies hopes that the Fed is truly done with its rate hikes should soften the US dollar and potentially <strong>drag USDJPY lower.</strong></li>
</ul>
<hr />
<p><img decoding="async" loading="lazy" class="size-full wp-image-54242 alignleft" src="https://www.investmacro.com/articles-analysis/wp-content/uploads/2014/07/Forex-Time-Logo.png" alt="Forex-Time-Logo" width="262" height="90" /><strong>Article by <span><a href="https://www.investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></span></strong></p>
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