USD/JPY: Upside risk towards 114.40/50 target

Cycles & Levels: The weekly remains unambiguously bullish with an active up-cycle playing out. Earlier in the week, a daily up-cycle was confirmed and ever since we’ve seen two days of corrective moves with the tapering of volumes reinforcing the view of the overall bullish stance. A key area to monitor, as reflected in the hourly chart will be the 50% fib retracement, as it intersects with the back-side of this week’s broken trendline. The order flow is conducive for an upside extension based on the steepness of the moves.

Correlations & Volumes: The pair has seen the downside limited even on the aftermath of the sharp sell-off in the USD. As stated, the environment of USD weakness occurs as part of rising equities, which keeps the overall outlook positive in line with the higher timeframe cycles, which are all aligning in favor. If buyers can build value above Thursday’s POC at 112.85/90 and recover the 113.00, this will be an important precursor to seeing the underlying up-cycle resuming its upward momentum. Be aware that the bias can be easily denied on the US NFP outcome later today.