After months of making smaller waves inside a descending triangle chart formation, USDJPY looks set to make a new wave higher as it broke above the the triangle resistance. This could be a sign that more longer-term gains are in the cards for the pair.
Price has recently made a couple of failed attempts at breaking below the triangle support area near the 101.00 major psychological level. From there, dollar bears made a stronger push higher past the 101.50 minor psychological resistance, which lined up with the top of the triangle.
USDJPY Triangle Breakout
The chart pattern is roughly 300 pips in height, which means that the resulting breakout could be of the same size. This suggests that USDJPY might soon be on its way to testing the 104.00 resistance levels.
However, if the upside break proves to be a fakeout, there could still be a chance for the pair to break below the bottom of the triangle. A candle close below the 101.00 mark could signify that more losses are in the cards for USDJPY. In that case, the pair might fall as low as the 98.00 mark, although the 100.00 level might still hold as near-term support.
Data from the US has been mixed yesterday, although the improvement in the initial jobless claims was seen to be the main boost for the dollar’s value on Thursday’s trading, leading to an upside break for USDJPY despite weaker than expected final manufacturing PMI and new home sales figures.
As for the yen, strong CPI figures released earlier today could still give it enough support as it would convince most traders that further easing is no longer necessary. The Tokyo core CPI marked a 2.8% gain, higher than the projected 2.7% increase, while the national core CPI indicated a 3.3% increase as expected.
To contact the reporter of the story: Samuel Rae at firstname.lastname@example.org