USD/JPY: Weakness seen as corrective after the completion of a major base – Credit Suisse

USD/JPY has been capped at the 2018 highs at 114.55 as suspected and a pullback is seen underway. With a major base seen in place, weakness stays seen as corrective only ahead of an eventual break in due course for 117.12, economists at Credit Suisse report.

A setback is looked for

“With a major base in place above the 112.40 high of 2019, we maintain our view that weakness will be corrective and temporary only. A clear break of 113.99 should mark a near-term top to add weight to our view for a setback to 113.81/61 initially, with fresh buyers expected here for now. A break can see a deeper retreat towards 113.08/04 but this will ideally prove the limit of the downturn.”

“Resistance is seen at 114.36 initially. Above 114.45/55 can quickly reassert the uptrend for the 114.73 high of November 2017 next ahead of the 78.6% retracement of the December 2016/March 2020 fall at 114.92 and then 117.12 in due course, the long-term downtrend from April 1990.”