The JPY may be ready to retrace!
The USDJPY hit a new high for 2023 and quickly reversed with some downside follow through today ahead of the weekend. A headline came out earlier about Japan's CPI outlook for fiscal 2024 might be raised by the Bank of Japan next week (Nikkei news) and this, alongside some headlines out of the Middle East, may be driving traders out of JPY short positions.
This has created some technical damage for the pair. Divergent RSI on the daily chart has been haunting bulls, but now the RSI is pointing lower as the pair may be looking for a move back towards the 50dma. We had discussed on the Week Ahead video last week that the inflation forecasts next week may be a catalyst for some JPY volatility.
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