Notably, the market has recently broken out of a strong bullish flag pattern, indicating the potential for an upward move towards the ¥148 level.

• The US dollar showed strength against the Japanese yen in Friday’s trading session, signaling continued greenback resistance in the currency pair.
• These developments are consistent with the lack of decisive action by the Bank of Japan, indicating their willingness to maintain loose monetary policy for the foreseeable future.
• As a result, the Japanese yen is poised to weaken against most currencies, including the US dollar.

Notably, a significant one has recently broken out in the market bullish a flag pattern that shows the potential for an upward move towards the ¥148 level. Subsequently, a target of 150 yen could be within reach. Many traders probably have this scenario in mind given the current market dynamics. The overall outlook suggests a “buy on the dips” situation, with the bullish flag pattern offering support and indicating the likelihood of a rally at the right time. Additionally, the ¥138 level, which previously acted as resistance within the ascending triangle, could serve as a potential floor for the market. Traders often take into account historical price levels, leading to the concept of “market memory”. Speaking of the ascending triangle pattern, its measurement is in line with a move to around 148 yen, further strengthening the bullish case. With these factors in mind, it seems only a matter of time before the pursuit of yield continues to propel this currency pair higher, reminiscent of the traditional “carry trade” strategy.

It is key to watch the market closely, but so far there is little indication that the overall bull trend will be significantly threatened. A daily close below the ¥138 level would be necessary to raise concerns. At present, however, such a scenario seems unlikely. Therefore, the long-term perspective favors a bullish stance on this pair.

The US dollar finally showed resistance against the Japanese yen, supporting a positive outlook for the currency pair. The Bank of Japan’s inactivity is contributing to the weakening of the yen against various currencies, including the dollar. A recent breakout from a bullish flag pattern suggests a potential rally towards ¥148, followed by a possible extension towards ¥150. The market’s “buy on the dips” sentiment is reinforced by the supportive nature of the bull flag and the presence of the ¥138 level as a likely floor. Traders should remain alert to market movements, especially a daily close below ¥138, as this may indicate a shift in the prevailing trend.

Potential signal: USD continues to race higher and is now a buy. Stop loss is possible at 140, with a target of 145.

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