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USD/JPY: how much upside is left? (video)

Kira Iukhtenko, FBS

Japanese yen was the weakest currency on the past week, falling by almost 2% versus the US dollar. As we expected, the hawkish Federal Reserve meeting offered additional support to the USD/JPY pair.

As a result, the greenback jumped from 106.70 to a new 6-year high of 109.50, rallying for a third consecutive week. The pair broke above the 200-month MA for the first time ever. The pair is overbought, look at the impressive MACD divergence on the weekly chart. The bullish demand remains very strong, though. The 110.60 mark is now in sight – this is the 2008 high. I would expect the price to hit this target in the coming days/weeks before entering a prolonged consolidative phase in the 104/110 yen range.

Next week the Japanese economic calendar is empty except for the inflation data release on Friday. If the trend of slowing inflation continues, market expectations for additional BOJ monetary stimulus will increase. The next Bank of Japan meeting takes place on October 9. 

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