USD/JPY - Bulls defending ?

4天前

Monday may show significant volatility in markets following Trump investiture. Where the dollar will head to remains uncertain, number of FED cuts for 2025 remain uncertain but recent NFP reports and CPI showed strength in labor market and higher inflation, leaning towards a hawkish Fed for this start of the year.
What matters for next week is Trump's investiture, market will be responsive to any type of communication from the incoming president. Trump has made it clear that he wants a weak dollar to reduce the trade deficit. Technical show that Dollar has gained incredible momentum over the past 4 weeks. There will be a clear dilemma for the markets on will Trump's politic will be inflationary (and cause Fed to hold rates higher for longer) or will he succeed in implementing a weaker dollar. Historically, Dollar fell the first months Trump was in office in 2017.

- Currently, USD/JPY USDJPY is trading around a key area around 156.000 around the 4H 20 EMA. Bulls showed up on Friday.
Bulls reclaim 156.000 area of this 4H trading range:

- If dollar remains strong next week, we could see the USD/JPY continue to trade within this 4H range, which would confirm a failed breakout from this TR and put our next target on 158.000. Multiple ways to trade this, scale in if bulls strong on Monday for aggressive traders or wait to see to see consecutive 4H bull bars for entries.
-Valid fake outs often lead to aggressive moves in the opposite direction of the breakout as sellers may be trapped in a loosing trade leading to both bulls and bears buying.

DXY DXY bounced of the bullish trending line:

- The play for next week could be to see the dollar rally towards 110.000-110.500 area and see some potential reaction there, potentially some sideways trading before market decides its next move.

Remember to be careful on this, last week USD/JPY was a bear bar closing below its lower half which may be a sell signal for next week. Next week will be volatile for markets so I'd recommend lowering your trading size.

This is a C setup.

Peace,

昨天

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