- USD/JPY remains positive as the end of the month approaches, up 5.50%.
- News from China that Shanghai is about to ease lockdowns lifted investors’ spirits.
- USD/JPY Price Forecast: A Bullish Engulfing Pattern on the daily chart opens the door to a yearly high.
The USD/JPY bounces from Tuesday’s lows and rises above 128.00, attributed to an upbeat market mood as US Treasury yields rose in the American session. At time of writing, USD/JPY is trading at 128.34.
Meanwhile, the dollar remains resilient, posting gains for the fifth day in a row. The US Dollar Index, a basket of six currencies that measures the value of the dollar, rose 0.65% to 102.961, a tailwind for USD/JPY as the Wall Street close looms. Additionally, the US 10-year yield is poised to close near the 2.80% level after Tuesday’s close around 2.726%.
Market sentiment has improved throughout Wednesday. European stocks trimmed losses, while US stocks rose. News from China that Shanghai may be on the verge of “relaxing” Covid-19 zero-tolerance restrictions, coupled with extensive testing in Beijing amid a coronavirus outbreak in the week, calmed market participants. Meanwhile, the conflict between Russia and Ukraine escalated when Gazprom, a Russian company, stopped natural gas shipments to Poland and Bulgaria.
USD/JPY Price Forecast: Technical Outlook
Meanwhile, the dollar bulls regained control of the pair as price action throughout the day shows. In the Asian session, USD/JPY opened near Tuesday’s lows around 127.25 and dropped towards 127.00 on dovish sentiment. However, the pair recovered and rose more than 150 pips, posting a daily high near 128.50.
USD/JPY remains biased to the upside. The price action of the last two days formed a “bullish engulfing pattern”, which suggests that the pair could resume to the upside.
That said, the first resistance for USD/JPY would be Wednesday’s high at 128.59. A break above would expose the 129.00 mark, followed by the 20 Apr swing and yearly high at 129.40, followed by 130.00.
Additional technical levels
Source: Fx Street
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