USDJPY is correcting in a wide corridor

23 May 2023 206
USDJPY is correcting in a wide corridor

The dollar rose against the Japanese yen on Monday, holding slightly below its 6-month high. Investors are assessing new data from the Federal Reserve (Fed) officials.

According to senior analyst at Kitco Metals Jim Wyckoff, market participants believe in the possibility of preventing a financial crisis. Traders expect FOMC’s last meeting minutes, which will be published tomorrow.

CME FedWatch shows that the possibility of raising rates by 25 basis points is 31.4% and the possibility of them remaining unchanged is 68.6%. However, increasing concerns about the U.S. debt ceiling and a probable default are additional drivers of the dollar, but short-term, as RBC Capital Markets senior associate Allison Enck said. There are 9 days left until the June 1 deadline, when the U.S. could run out of cash to pay its obligations.

On Monday, U.S. President Joe Biden and House Speaker Kevin McCarthy did not find a consensus on raising the government’s debt ceiling of $31.4 trillion. The officials promised to continue negotiations.

Janet Yellen, the U.S. Secretary of the Treasury, stressed the gravity of the situation. The likelihood of the U.S. paying its bills till mid-June is extremely low if the country's debt ceiling is not raised, Yellen said. The Treasury Secretary will give a new speech on Friday at 15:05 GMT.

The USDJPY pair continues to form an ascending corrective channel on the H4 timeframe.

USDJPY is correcting in a wide corridor - Photo 1

The price showed good momentum and broke through the local trend resistance near 137.80. Now it is directed to the main trend resistance.

According to the wave analysis, the USDJPY pair is in the formation of the third ascending wave on the H1 timeframe. Breaking through the top of the first wave at 138.75 has already taken place, an intensified movement can begin in the near future. The growth potential of 400 standard points might be limited by the trend resistance on the H4 timeframe.

The USDJPY signal:

The short-term outlook suggests buying

The target is at the level of 140.85.

Part of the profit should be taken near the level of 139.65.

The Stop-loss is at the level of 137.25.

Bullish trend is of short-term nature, so it is worth selecting the trading volume of not more than 2% of your balance.

This content is for informational purposes only and is not intended to be investing advice.

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