As it seems, the USDJPY has entered a bullish consolidation phase as a large US acquisition by Japanese chipmaker has also prompted some JPY selling. What is next? This technical analysis reveals.
11 September, OctaFX – The USDJPY pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow range, just below mid-111.00s.
USDJPY Enters a Bullish Consolidation phase
The pair built on last week’s goodish rebound from over two-week lows and continued gaining positive traction for the third consecutive session on Tuesday. News that Japanese chipmaker Renesas was buying US counterpart Integrated Device Technology for about $6.7 billion in cash weighed on Japan’s currency.
This coupled with a slight improvement in risk sentiment, as depicted by a positive mood across equity markets, further weighed on the Japanese Yen’s safe-haven status and provided an additional boost to the major.
However, a subdued US Dollar price action capped any further up-move and was seen as one of the key factors leading to a range-bound price action through the early European session.
USD price dynamics
In absence of any major market moving economic releases from the US, the pair remains at the mercy of broader market risk sentiment and the USD price dynamics.
Moving ahead, this week’s important US macro data – consumer inflation figures and monthly retail sales data will now be looked upon for some fresh directional impetus.
Omkar Godbole, Analyst and Editor at FXStreet writes,
“the path of least resistance appears to be on the higher side. However, a break above 111.76 (last week’s doji candle high) is needed to put the bulls back into the driver’s seat.”
“That said, only a move below 109.77 (August low) would confirm a bullish-to-bearish trend change. This scenario appears likely if the US President Trump opts for an all-out trade war with China,”
he adds further.
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