USD/JPY pullback holds support, upside still in play toward 161.00

Gregor Horvat Wavetraders

After that rebound from April low, USDJPY pulled back nicely into channel support around the 159 area, where the market is now trying to stabilize once again. The BoJ did not convince markets with a hawkish stance, as they again emphasized that they need more time before making any firm decisions, which is why we are seeing this rebound. From a wave perspective, it still looks like another leg higher is coming, with a move beyond 160.46 and possibly toward 161 or higher.

However, once those levels are reached, we should be more careful, as the BoJ could step in if yen weakness becomes too strong, especially with rising energy prices adding to inflation pressure in Japan.
Higher US yields can also put some more fuel of fire, for USDJPY to stay supported.

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Author

Gregor Horvat

Wavetraders

Experience Grega is based in Slovenia and has been in the Forex market since 2003.

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