The slump in US Treasury bond yields depressed the dollar and prevented any meaningful USD/JPY upside for now. Global geopolitical developments have investors wondering whether the Fed will take a less aggressive stance addressing high inflation. As a result of the flight to safety worldwide, the yields on US bonds fell sharply. Therefore, USD/JPY has remained below Friday's swing high, around 115.75. As well as this, the market will be influenced by US bond yields, which can shake USD demand and allow traders to profit from some volatility. It would be wise to wait for follow-through buying before traders begin positioning for any further move up. The upcoming headlines surrounding the Russia-Ukraine saga will likely influence market risk sentiment when no significant economic reports move the market.
Since peaking at the 5-year highs of around 116.330 in January, USD/JPY has consolidated within a triangle pattern. Currently, buyers are challenging the 115.750 resistance level, following a pullback from the 50-day EMA, which held support at 114.400.
As the daily chart shows, USD/JPY has been in a bull run since September 2021, trading above the major EMAs. Prevailing upside momentum can lead the price towards the upper line of the pattern. Before that, we need to see a sustained move over the past week's top at 115.750 that will indicate the presence of buyers. If bullish momentum intensifies, the price may surge into the psychological level of interest at 116.00. Overtaking this level can trigger a further upward movement through the resistance line of the consolidation pattern at 116.330. overcoming this hurdle will signal to resume the uptrend.
On the downside, if sellers rein the market and take control, the pair may retreat to 115.135 as an immediate support level. A further decline below this barrier may send the price to meet the support line of the triangle pattern in the zone between 114.55 and 114.40. A decisive break below this handle will signal to establish a new downtrend
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