USD/JPY went into full bull mode beginning final week, which finally result in a break above a protracted consolidation vary.
Is that this breakout legit and can USD/JPY be capable of get previous the following resistance space simply forward?
USD/JPY Consolidation Breakout?
USD/JPY has been on fairly a rally this previous week, correlating with final week’s extra hawkish-than-expected Federal Reserve financial coverage assertion. Whereas we didn’t get a precise taper begin date on the assembly, there was extra consensus that tapering ought to occur quickly and that charge hikes could occur in 2022 vs. the 2023 expectations we noticed on the June assembly.
This appears to have lit U.S. Treasury yields on hearth, which is being attributed to USD/JPY’s push increased in addition to U.S. bonds turn into comparatively extra engaging. The extensively adopted U.S. Treasury 10-year yield broke above recent consolidation between 1.25% – 1.35%, now trading above 1.50% and is probably going on its strategy to 2021 highs round 1.75% if the Fed continues to trace at tapering and charge hikes prior to beforehand anticipated.
USD/JPY has rallied for 5 consecutive days, practically testing the July 2nd excessive at 111.65. Is that this rally about to expire of steam? Or can the market break and make new 2021 highs?
For us, we predict some short-term revenue taking could hit the markets after a swift transfer, particularly with the tip of the month and quarter coming this week. However longer-term, this might flip into a brand new leg increased on the longer-term timeframes.
We’ll be waiting for a pullback from present ranges, and if we see a retest and bullish reversal patterns kind across the high of the damaged consolidation vary (roughly 110.40 – 110.70), we’ll begin to plan out a possible lengthy place if the Fed tightening story continues to stay the dominant theme.
What do you guys assume? Is that this a short-term high on USD/JPY or are the bulls prepared to interrupt above the following resistance space? Will a dip be a shopping for alternative?
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