USDJPY Hits New Highs, But New Resistance May Not Be Far Away

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This year, the JPY hits new lows across the board even though BOJ decided to end its ultra-loose policy, by raising rates for 10bp in March. But what's also technically important is that USDJPY broke higher, into a fifth wave of a higher degree wave III that is now at 1990 resistance. From an Elliott wave perspective we also see a potential wedge formation, but shows room for C subwave to complete the pattern with fifth wave up at 162-164 resistance.

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Even if we consider an ongoing impulsive five-wave bullish cycle within an extended 5th wave regarding second count, there's still a chance it's finishing subwave 5 of III that can cause a new, higher degree corrective retracement in wave IV back to around 155 support area.

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All that being said, despite lower and bearish yields, JPY keeps trading lower, but as soon as yields face a bearish continuation, we believe that JPY will recover again, especially because of BOJ that keeps mentioning potential interventions in the FX market.


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