Chart of the day - USDJPY (11.12.2023)

Japanese yen is the worst performing G10 currency at the start of a new week. Pullback on the JPY market comes after media reports suggested that Bank of Japan may not be as hawkish as it was recently thought and, in turn, a recent JPY rally may have been overdone. First, Reuters came out with a report suggesting that Bank of Japan Governor Ueda is unwilling to proving markets with clear hints on the timing of a policy shift. Later, Bloomberg reported that Bank of Japan sees little need to end negative rate this year. This means that BoJ may decide to keep rates unchanged when it meets next week. However, it was also said that Japanese central bankers will consider all the available data when making decision, as well as include financial conditions on the markets up to last minute ahead of the meeting.

Those media reports have a clear dovish tone to them, and markets are reacting to it. USDJPY is up 0.8% on the day and trades above 146.00 handle. Taking a look at D1 chart, we can see that the pair bounced off the lower limit of the Overbalance structure at 143.40 last week, hinting that an uptrend is still in play, and launched a recovery move later on. Moving to the lower timeframe (H4, next chart) we can see that today's advance was halted at a key medium-term resistance zone - 146.50 area, marked with previous price reactions, downward trend line as well as 50-period moving average (green line). A break above this area would be a strong hint that downward correction is over and a move back towards recent highs may be looming next.

USDJPY at D1 interval. Source: xStation5

USDJPY at H4 interval. Source: xStation5