Detailed FX Market Outlook and Analysis

USD/JPY Daily Analysis 11-MAY-2023

USD/JPY Daily Analysis

The short-term outlook for USD/JPY suggests a neutral bias as consolidation continues above 133.48. With the minor resistance at 135.68 remaining intact, there is a slight preference for a further decline. The ongoing fall from 137.76 is interpreted as the third leg of a pattern that originated from 137.90. If the price falls below 133.48, the initial target will be 133.00, and a further break could lead to a target of 129.62 support. However, as long as 129.62 holds, there is still a favorable probability for a larger rebound from 127.20 to resume at a later stage. On the upside, a break above the minor resistance level at 135.68 would shift the bias back to the upside, targeting 137.76/90 instead.

Taking a broader perspective, the price movements from the high at 151.93 are currently considered as a corrective pattern within the long-term uptrend. The first leg of this correction is believed to have completed at 127.20, followed by a rebound seen as the second leg. A sustained break above the 38.2% retracement level of 151.93 to 127.20, which is located at 136.34, would bring a stronger rebound with a target at the 61.8% retracement level of 142.48. Meanwhile, if there is a break of 129.62, it would suggest that the third leg of the correction is beginning, targeting the previous low at 127.20.

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