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USD/JPY: Pace of Gains Accelerate as US Fed Fuels Sentiment – 22 March 2022

The USD/JPY has continued to push higher as financial institutions react to hawkish rhetoric from the U.S Federal Reserve.


The yen is a popular asset during turbulent times.

The USD/JPY has moved above the 120.000 mark in early trading this morning. Global financial institutions have reacted to hawkish rhetoric from the U.S Federal Reserve, which essentially said it is not against raising interest rates by half a point increments if inflation needs to be fought more aggressively. The USD has gotten stronger against many of the major currencies in forex.

While some USD/JPY traders who are long may be nervous about the move and looking for the potential of reversals to occur, they may want to also ponder the fact the Japanese Yen has a proven history of producing strong trends which happen in violent spurts technically. The USD/JPY is now trading near values it has not traversed since February of 2016. However, it should be noted the USD/JPY was trading near 123.0000 in the first week of December 2015, which highlights the ability for the forex pair to actually trade higher.

Traders need to safeguard their positions with conservative amounts of leverage, but for traders who are going to attempt to bet against the prevailing trend in the near term, very solid risk management will be essential. Betting on reversals lower may feel enticing, but it may prove to be a costly mistake unless a trader is nimble enough to be fast and use quick hitting take profits. Technically the USD/JPY is certainly traversing long term highs and resistance is an open question, but historically we have seen these heights in value from the forex pair before.

As the 120.350 mark is now being seen, traders who decide to look for additional movement higher may want to broaden their stop loss orders a bit to allow for the potential of downside movement to be demonstrated. More conservative traders may want to only become buyers if the 120.200 to 120.100 levels are tested lower, this to ignite buying positions.

Yes, the notion the Forex market has reacted in a strong manner is correct, and the USD/JPY will start to see an incremental move lower is a practical idea, but the question is when this move will occur? How much more room is left for the USD/JPY to move higher? Is the rhetoric from the U.S Fed fully digested or does the USD/JPY still have room to react to the upside? A lot of questions with no definitive answers, until the passing of time deliver the results. Short term traders should brace themselves for more volatility and be careful.

Current Resistance: 120.550

Current Support: 120.100

High Target: 121.450

Low Target: 119.450

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