As the currency pair reached resistance level, already set in our previous article, we do not expect further gains but more likely the pair to wait couple of sessions for additional incentive.
Nevertheless, losses from previous two-month bearish correction on the US dollar has been largely erased, helping the currency to recover and get back to its long-term bullish trend against the Japanese yen.
As the Bank of Japan is keeping its monetary policy unchanged, there is only little reason to believe in any long-term strengthening of the Japanese currency. As the country has already pushed the inflation to accelerate slightly, according to recent data, quantitative easing seems to persist for some time until the central monetary authority changes its stance.
Nevertheless, the Federal Reserve is preparing market for the expected liftoff, albeit postponed from first plans on June, officially declared as a dream in latest Federal Open Market Committee meeting minutes.
As the United States are expected to experience monetary policy tightening as the first among Japan, EU and UK, long-term is strongly supported by this fact and boosts dollar against all of its major counterparts.
From the technical point of view, we have already reached the resistance level at ¥123.116. Now slight correction is expected to come, more likely as further advance of the dollar. If another bullish incentive for the dollar comes, we can expect the currency to strengthen to ¥124.382, while bears could set their take profits on ¥121.716 or ¥120.767.
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