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Saturday, 28 January 2023
USD/JPY: Gains Pick Up Speed as the US Federal Reserve Pumps Up Optimism

USD/JPY: Gains Pick Up Speed as the US Federal Reserve Pumps Up Optimism

2022-10-31

As financial organizations react to the US Federal Reserve’s hawkish tone, the USD/JPY has continued to rise.

In early trading this morning, the USD/JPY crossed the 120.000 milestones. Global financial institutions have reacted to the US Federal Reserve’s hawkish tone, which effectively stated that it is not opposed to raising interest rates in half-point increments if inflation needed to be combated more vigorously. In currency, the dollar has gained stronger versus several of the major currencies. While some long USD/JPY traders may be concerned about the rise and searching for reversals, they should also consider the fact that the Japanese Yen has a history of creating big trends that come in dramatic surges technically. The USD/JPY is presently trading at levels it hasn’t seen since February of last year. However, in the first week of December 2015, the USD/JPY was trading at 123.0000, indicating that the currency pair has the potential to move higher. Traders should use cautious amounts of leverage to protect their holdings, but traders who want to bet against the current trend in the near term will need to use extremely good risk management. Betting on lower reversals may appear appealing, but unless a trader is nimble enough to be quick and employ rapid hitting take profits, it might be a costly error. Technically, the USD/JPY is approaching long-term highs, and resistance is an open issue, although the currency pair has before reached these levels of value.

Because the 120.350 level has been reached, traders who wish to look for more upward movement can expand their stop-loss orders to account for the possibility of negative movement. More cautious traders may wish to purchase only if the 120.200 to 120.100 levels are tested lower, as this will trigger buying positions.

Yes, the assumption that the Forex market has responded strongly is valid, and that the USD/JPY will begin to go downward incrementally is a viable option, but the question is when this move will occur. How much more upward potential does the USD/JPY have? Is the US Federal Reserve’s rhetoric completely absorbed, or does the USD/JPY still have the potential to rise? There are a lot of questions with no solid answers, and the only way to find out is to wait for the findings to come. Short-term traders should prepare for increased volatility and use caution.

USD/JPY Short-Term Outlook

120.550 is the current resistance.

120.100 is the current level of support.

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