- Summary:
- USDJPY looks for direction as the price action is contained by a triangle that may act both as continuation or reversal. Eyes on the US elections.
The USDJPY is one of the currency pairs that best reflected the uncertainty that reigned in financial markets. The JPY managed to rally against the USD this year, but the rally was not so impressive when compared to what other fiat currencies did.
Bank of Japan later this week is expected to keep its monetary policy unchanged. With the world preparing for the U.S. elections one week from now, the chances are that the USDJPY pair remains in the tight ranges showed in the chart below.
However, the moment of truth nears as a breakout appears imminent. Both bulls and bears have an argument for a trade, and the focus shifts now on the two trendlines that contained the price action lately.
Suga Vows Zero Greenhouse Gas Emissions by 2050
In his first speech in front of both houses since becoming leader, Suga, the new Japanese Prime Minister, vowed to eliminate greenhouse gas emissions in Japan by 2050. The pledge lays down the Japanese vision of the future and how it incorporates government spending in the years and decades to come.
Just like the European Union, the Japanese government invests in green projects and favors green policies. Will we see green bonds from Japan anytime soon?
USDJPY Technical Analysis
Technical traders may argue both for the long and short side on USDJPY. On the long side, bulls may want to wait for the price to break the upper edge of the triangle. This triangle may very well act as a continuation or reversal patterns, so letting the price move first is essential. On a break higher, bulls may need to place the stop-loss order at the horizontal line (104) and use a risk-reward ratio of at least 1:2, ideally 1:3.
On the other hand, a break below 104 opens up the gates for the measured move of a descending triangle. In this case, bears need a stop loss at 106 and target a move back to the magical 100 level.
USDJPY Price Forecast
