King Dollar showed strength across the board in the third quarter of the year - dominating all of the currencies in the internation market after Jerome Powell provided strong hawkish sentiments in the FOMC meeting minutes in terms of adapting to tapering on the monetory policies in 2022. U.S Dollar based on bullish fundamentals favored the hawkish tone by strengthening the pair enough to provide a breakout above our major resistance 110.80, as mentioned in our previous analysis - which would drive the pair towards 111.70, instead we can notice U.S Dollar versus Japanese Yen providing us with a touch down at 112.0. The breakout above 111.70, broke the highest highs in the daily time frame, proceeded by a bearish reversal from our weekly major resistance 112.20, as can be seen that the pair failed to break above multiple times. But from the current market scenario, the bullish momentum built over the chart will continue in the second quarter of 2022 - driving USDJPY higher towards monthly resistances 113 and 114.40. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Federal Reserve Chair Jerome Powell noted in his comments after the FOMC that a majority of members felt that the economic conditions for beginning a taper of the $120 billion in monthly bond purchases had been met. Treasury yields have been in sharp ascent since then.

The Fed has been preparing markets for the eventual reduction and end of the emergency bond program since first mentioning the possibility in the minutes of the April FOMC meeting released on May 19. We are expecting King Dollar to retest some major support levels at 110.50 and 109.10 before moving any higher. The relative strength index on the interday charts and the daily time frame shows that the pair needs to recover from the overbought zone - which it did and will trade around the monthly and weekly pivot for a corrective structure to be formed and then project higher.  

USDJPY

Oct 01 2021