USD/JPY Monthly Elliott Wave Analysis
Based on the Elliott Wave structure on the monthly timeframe, USD/JPY appears to be trading within a major Wave 3. This larger Wave 3 is composed of five internal sub-waves, and price action currently seems to be developing within Sub-wave 5.
In the short term, the pair is expected to continue its bullish movement toward the 161.563 – 162.804 resistance zone.
However, the presence of a regular bearish divergence suggests that once this target area is reached, the market may begin a corrective move, potentially forming the larger Wave 4.
Key Levels
• Bullish target: 161.563 – 162.804
• Possible scenario afterward: Start of Major Wave 4 correction
USD/JPY Fundamental Outlook
From a fundamental perspective, the bullish outlook for USD/JPY is supported by the ongoing divergence in monetary policy between the Federal Reserve and the Bank of Japan.
The Federal Reserve continues to maintain relatively higher interest rates in order to control inflation, which supports the strength of the US Dollar. In contrast, the Bank of Japan has historically maintained an accommodative monetary policy with lower interest rates, keeping the Japanese Yen comparatively weaker.
This interest rate differential encourages capital flows toward USD-denominated assets, providing underlying support for USD/JPY in the medium to long term.
However, market participants should also monitor potential policy adjustments from the Bank of Japan. Any signals of monetary tightening, changes in yield curve control, or unexpected interventions in the currency market could increase volatility and trigger corrective movements in USD/JPY.
Overall, the current macroeconomic environment continues to favor USD strength against the Yen, aligning with the broader bullish structure seen on higher timeframes.
Based on the Elliott Wave structure on the monthly timeframe, USD/JPY appears to be trading within a major Wave 3. This larger Wave 3 is composed of five internal sub-waves, and price action currently seems to be developing within Sub-wave 5.
In the short term, the pair is expected to continue its bullish movement toward the 161.563 – 162.804 resistance zone.
However, the presence of a regular bearish divergence suggests that once this target area is reached, the market may begin a corrective move, potentially forming the larger Wave 4.
Key Levels
• Bullish target: 161.563 – 162.804
• Possible scenario afterward: Start of Major Wave 4 correction
USD/JPY Fundamental Outlook
From a fundamental perspective, the bullish outlook for USD/JPY is supported by the ongoing divergence in monetary policy between the Federal Reserve and the Bank of Japan.
The Federal Reserve continues to maintain relatively higher interest rates in order to control inflation, which supports the strength of the US Dollar. In contrast, the Bank of Japan has historically maintained an accommodative monetary policy with lower interest rates, keeping the Japanese Yen comparatively weaker.
This interest rate differential encourages capital flows toward USD-denominated assets, providing underlying support for USD/JPY in the medium to long term.
However, market participants should also monitor potential policy adjustments from the Bank of Japan. Any signals of monetary tightening, changes in yield curve control, or unexpected interventions in the currency market could increase volatility and trigger corrective movements in USD/JPY.
Overall, the current macroeconomic environment continues to favor USD strength against the Yen, aligning with the broader bullish structure seen on higher timeframes.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.