(MENAFN- Daily Forex)
The USD/JPY embarked on a slight pullback during Wednesday's trading session, only to stage an impressive resurgence and breach the 50-Day EMA. This development has underscored the prevailing sentiment that short-term pullbacks represent buying opportunities, a sentiment that has been validated throughout the day. With the ¥150 level emerging as a key target, a breakthrough above this level could potentially propel the currency pair towards the ¥152 mark.
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Recent market chatter has revolved around the potential for the Federal Reserve to alter its monetary policy, leading to a selloff in the US dollar. Additionally, the Bank of Japan has expressed concerns about the yen's depreciation, hinting at the possibility of a departure from its loose monetary policy. However, this prospect is unlikely given Japan's significant debt burden. Nevertheless, these discussions triggered apprehension among traders, resulting in a temporary sell-off. Nonetheless, recent price action suggests a strong resurgence in the pair.
Upon closer examination, it becomes evident that the prevailing uptrend is making an effort to reassert itself. This lends credence to the idea of capitalizing on short-term pullbacks to find value in the USD. This strategy holds particular appeal for those who have not already entered positions after the currency pair broke above the top of Tuesday's hammer pattern USD/JPY's Uptrend Amid Reduced Market Activity
It is important to note that Thursday marks the Thanksgiving holiday, which traditionally results in reduced market activity as it drains liquidity. With North American markets essentially closed, the focus will shift to early European trading, possibly leading to a minor pullback. However, as long as the support level at ¥147.80 holds, there appears to be little incentive for traders to adopt a bearish stance. Ultimately, the path forward may not only involve a revisit of recent highs but also the prospect of a breakout towards the ¥155 level. This target had been under consideration in recent weeks and remains a viable objective.
At the end of the day, the US dollar's resurgence against the Japanese yen has reignited the uptrend, validating the strategy of buying on short-term pullbacks. While concerns about potential shifts in monetary policy and yen depreciation have created a short-term selling move, the prevailing trend appears to be reasserting itself. With Thanksgiving temporarily quieting North American markets, traders will closely monitor early European trading for potential developments on Thursday. As long as the key support level holds, bullish sentiment is likely to dominate, possibly paving the way for a push towards the ¥155 level eventually.
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