The USD/JPY pair rebounded and recovered after its massive drop. It was trading at 135.46 at the time of writing. The bias remains bullish despite temporary declines, but an upside continuation needs strong confirmation. As you already know, the Dollar Index dropped a little after the FOMC, that's why the USD depreciated in the short term versus the JPY.
Now, the DXY tries to come back higher forcing the USD to appreciate. On the other hand, the Japanese Yen depreciates as the Japanese Yen Futures drop.
Fundamentally, the USD received a helping hand from the US data. The Pending Home Sales, Durable Goods Orders, and Core Durable Goods Orders reported better than expected data today. Tomorrow, the BOJ Core CPI could report a 1.5% growth versus a 1.4% growth in the last reporting period. The USD/JPY pair could jump higher if the US data comes in better than expected. The CB Consumer Confidence is seen as a high-impact event and it could change the sentiment.
USD/JPY Downside Seems Over!
USD/JPY failed to stabilize under the 38.2% retracement level signaling that the downside could be over. Now, it has registered a valid breakout above the upper median line (UML) and it challenges the 23.6% (135.47) and the weekly pivot point (135.38).
The bias remains bullish but the price could still be overbought. Technically, the current rebound could represent a potential flag pattern that could announce a larger corrective phase. Still, this scenario is far from being confirmed, only a new lower low could confirm more declines.
USD/JPY Forecast!
Jumping, closing, and staying above the 135.54 could activate an upside continuation at least towards 136.70. This scenario could help the buyers to go long again in the short term.
