Last week I gave a trade idea on XAUUSD with a target around the $2,020 price line. At the time of writing, XAUUSD already exceeded the target and I’m sure that would leave a lot of people wondering what to expect next. Below, I have presented my view of how I expect the price action to turn out in the meantime.
USDJPY is Heading Towards the 25-year High
2022-12-15 • Updated
A rise in Treasury yields and solid US labor data on Friday boosted the dollar, which climbed against the basket of major currencies.
The yen fell to a fresh 24-year low after Japan's ruling coalition expanded its majority in Sunday's upper house election. Investors interpreted the result as an upcoming wave of super-easy monetary policy.
USDJPY gained 0.9%, breaching the closely watched 137 level. Bank of Japan Governor Haruhiko Kuroda stated on Monday that he wouldn't hesitate to add monetary stimulus if needed to boost the stuttering economy.
However, the election outcome reflects public support for Prime Minister Fumio Kishida, who adheres to a dovish monetary policy and makes it clear that rising inflation in Japan isn't as critical for the local population as overseas.
With the BOJ keeping interest rates pinned to the floor even as foreign ones climb, the yen has sunk over 16% against the greenback this year. According to data compiled by Bloomberg, the currency is just a hair's breadth away from its worst drawdown ever.
What about the USD?
The US dollar may remain expensive until the risks around elevated global inflation, European energy security, and China's growth outlook have been resolved. Moreover, the breakout of the 107.50 resistance level opens the way to 110.50 for the US dollar index, which is a 2.8% gain. An upcoming 50 basis point rate hike by the Federal Reserve in July makes it almost inevitable.
USDJPY, Daily chart
Currently, buyers are attacking the 137.50 resistance, the 261.8 Fibonacci level. The breakout of this zone opens the way to 144.00, the highest ratio since 1998.
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Bearish Scenario: Selling below 22.65 with TP1: 22.34 (intraday) and TP2: 22.02 (swing). Bullish Scenario: Buying above 22.70 with TP1: 22.90.
Intraday and swing scenarios based on price action and volume profile.