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Home ANALYSIS

USDJPY moves higher in early trading

A.R Chowdhury by A.R Chowdhury
March 21, 2022
Reading Time: 4 mins read
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USDJPY moves higher in early trading

USDJPY

USDJPY on the hourly chart

Japan is on holiday in observance of vernal equinox day, but that is not stopping 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
from moving higher in early trading.

The pair did move back higher on Friday after Thursday’s modest dip broke a string of eight consecutive higher closes. The high price on Friday also saw the pair move to the highest level since the end of January 2016 to 119.392 (see daily chart below), before dipping modestly into the close (closed at 119.14).

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Today the price is moving higher with the pair just reaching a intraday high of 119.30. The next key target remains the high from Friday at 119.392.

What would hurt the bullish bias on the hourly chart?

A trendline from March 10 connects recent lows from Thursday and Friday and cuts across at 118.908 currently (and moving higher – see red numbered circles on the hourly chart above).

A move below that level would have traders targeting the rising 100 hour moving average currently at 118.553. The price of the USDJPY has not traded below its 100 hour moving average since March 7 when the moving average was down at 115.29.

Below the 100 hour moving average and the 118.44 level would be another target to get to and through to increase the bearish bias

Taking a broader look at daily chart below, the price last week moved above the end of 2016/beginning of 2017 swing highs between 118.60 and 118.658. That area (just above the rising 100 hour MA) will also be a key support and bias defining level this week.

Move below that area (and the 100 hour MA) and there should be more selling momentum on the disappointment from the break higher.

USDJPY

USDJPY above resistance at 118.60-118.65
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A.R Chowdhury

A.R Chowdhury

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