Early in the European session, the Japanese yen is trading around 145.50 within an uptrend channel formed since August 7, above the 5/8 Murray, and above the 21 SMA.
On the 4-hour chart, we can see that the USD/JPY pair is trading with a strong upward movement. It is expected that in the next few days, it will continue ascending to reach 6/8 Murray at 146.87.
USD/JPY reached a new high at 145.85, its highest level since November 2022. The weakness of the Japanese yen is due to bearish market sentiment. The US dollar continues to strengthen, which exerts negative pressure on the yen and this trend is expected to continue in the coming days.
USD/JPY continues to underperform as a result of a dovish stance taken by the Bank of Japan (BoJ), which is the only central bank in the world to maintain a negative benchmark interest rate. This is a factor that exerts weakness in the Japanese yen, so any short-term pullback will only be seen as a buying opportunity.
In case the Japanese Yen breaks sharply below the 21 SMA and below the psychological level of 145.00 in the next few hours, we could expect a bearish acceleration and USD/JPY could reach 4/8 Murray at 143.75. It could even reach the 200 EMA located at 142.27.
On the other hand, as long as the Japanese yen trades above the 5/8 Murray and above the 21 SMA, any bounce around this level could be seen as an opportunity to buy with the target at 146.87.
Our trading plan for the next few hours is to wait for the JPY to fall below 145 to sell with the target at 142.27. The eagle indicator is in the overbought zone, a break below 145 could enable the signal to sell.
