USDJPY races up to the next swing area target.

The USDJPY moved higher on Monday and into Tuesday. A new high was reached on Wednesday at 137.965. That took the price above a swing area between 137.485 and 137.856 (see red numbered circles). The break failed however, and after the US CPI came in weaker than expectations, the price tumbled to a low of 134.65 on Wednesday and a lower low at 134.492 on Thursday (double bottom).

After trading above and below the 200 day moving average currently at 135.46 after the FOMC rate decision yesterday, trading today saw a rotation back to the upside as market participants digested the Fed hawkish stance.

That momentum got an additional boost in early US trading after basing near the 100/200 hour MA. This run came despite lower yields in the US. The 10 year is down -4.6 basis points. The two-year is near flat however.

Looking at the hourly chart, the price has returned back into the swing area between 137.485 and 137.856. The high price reached 137.650 and has backed off a touch from that level.

If there is more selling below 137.485, we could see a rotation back to the downside as traders continue to ponder tighter Fed policy, leading to lower growth, lower stocks, lower inflation, and a lower dollar.

Alternatively a break above 137.856 and then 138.000 would have traders reacting to a more positive technical bias shift.

For 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 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 Read this Term the ups and downs this week are a function of what the market is more focused on.

If the storyline is inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term is coming down. Rents and housing are coming down, large sections of the consumer is tapped out of savings due to the ratchet up in inflation and post covid spending, commodity prices are lower, etc, the pair can go lower.

If the storyline is the Fed is still on the kill inflation kick and lower yields can't go much lower (and may go up), the price can scoot higher.

As a result, that may call for traders to sell high and buy low for the time being with stops on breaks outside the extremes. For the USDJPY the extreme is now at 138.00 (the completion of the down and up "lap" seen this week). Does "the market" lean against that area, with stops on a break to the upside? It is a low risk trade opportunity.