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Home ANALYSIS

The USDJPY corrects to swing highs from earlier this week

A.R Chowdhury by A.R Chowdhury
March 17, 2022
Reading Time: 4 mins read
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The USDJPY corrects to swing highs from earlier this week

USDJPY

USDJPY back above 2016 – 2017 swing highs

The  USDJPY 
USD/JPY

The USD/JPY is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Japanese yen of Japan (symbol ¥, code JPY). The pair’s rate indicates how many Japanese yen are needed in order to purchase one US dollar. For example, when the USD/JPY is trading at 100.00, it means 1 US dollar is equivalent to 100 Japanese yen.  The US dollar (USD) is the world’s most traded currency, whilst the Japanese yen is the world’s third most traded currency, resulting in an extremely liquid pair, and very tight spreads, often staying within the 0 pip to 2 pip spread range on most forex brokers. Although the range of the USD/JPY isn’t traditionally particularly high, the lack of large price action often associated with other JPY pairs does make it easier to trade.This is especially true for short-term traders, although without offering a great pip potential. Even though the USD/JPY is the world’s second most traded pair, it’s not as popular as one might think with regards to retail traders.The pair carries a reputation as “boring”, although this isn’t an entirely accurate reflection. Trading the USD/JPYThe JPY is highly regarded as a safe haven currency, with investors often increasing their exposure following periods of uncertainty or market-induced fallouts.As both the US and Japan are highly developed economies, there are several key factors affecting the value of either currencies. This includes a range of economic indicators such as gross domestic product (GDP) growth, inflation, interest rates and unemployment data. Monetary policy by the US Federal Reserve and Bank of Japan are also large determinants in the value of each currency.

The USD/JPY is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Japanese yen of Japan (symbol ¥, code JPY). The pair’s rate indicates how many Japanese yen are needed in order to purchase one US dollar. For example, when the USD/JPY is trading at 100.00, it means 1 US dollar is equivalent to 100 Japanese yen.  The US dollar (USD) is the world’s most traded currency, whilst the Japanese yen is the world’s third most traded currency, resulting in an extremely liquid pair, and very tight spreads, often staying within the 0 pip to 2 pip spread range on most forex brokers. Although the range of the USD/JPY isn’t traditionally particularly high, the lack of large price action often associated with other JPY pairs does make it easier to trade.This is especially true for short-term traders, although without offering a great pip potential. Even though the USD/JPY is the world’s second most traded pair, it’s not as popular as one might think with regards to retail traders.The pair carries a reputation as “boring”, although this isn’t an entirely accurate reflection. Trading the USD/JPYThe JPY is highly regarded as a safe haven currency, with investors often increasing their exposure following periods of uncertainty or market-induced fallouts.As both the US and Japan are highly developed economies, there are several key factors affecting the value of either currencies. This includes a range of economic indicators such as gross domestic product (GDP) growth, inflation, interest rates and unemployment data. Monetary policy by the US Federal Reserve and Bank of Japan are also large determinants in the value of each currency.
Read this Term
moved higher yesterday after the FOMC rate decision and was the only major currency pair that stay positive (higher USD) on the day. The move to the upside did extend above swing highs from the end of December 2016 and early January 2017 between 118.60 and 118.658.

That break took the price the highest level in over seven years (going back to end of January 2015 – see weekly chart above).

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Drilling to the hourly chart below, the price correction off of the high yesterday at 119.116 saw the USDJPY move back toward the swing highs from 2016/2017 near 118.60 and 118.658. Finding support near that level did lead to a move up in the early Asian session, but stalled ahead of the high price from yesterday (the high price reached 119.019).

The subsequent fall today ultimately saw the pair below the aforementioned swing area, but could not get below the swing high from Tuesday’s trade nor the swing high from early yesterday near 118.44.

Recall from Tuesday, the price trend move to the upside ran out of steam at 118.44, and had a swift correction lower, only to quickly reversed back to the upside (see post here). The inability to break below that level, helped to keep the buyers still in play and the price has since moved higher.

USDJPY

USDJPY back above the swing area

Overall, my focus is still on the 118.60 to 118.658 area. Stay above is best case scenario for the buyers/bulls in the short term. Move below and we could see a rotation back down toward the 118.44 area. Will below that and traders would start to target the rising 100 hour moving average at 118.115.

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A.R Chowdhury

A.R Chowdhury

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