USD/JPY Roller-Coaster Ride Amid Geopolitical Tensions, Ueda's Hawkish Tone
USD/JPY experienced a volatile session on Friday, initially declining to 153.00s on escalating Middle East tensions and safe-haven flows favoring the Japanese Yen (JPY). The pair subsequently rebounded as tensions eased, with a senior Iranian official signaling no immediate retaliation plans.
Key Factors:
- Geopolitical Risk: Bomb attacks in Iran, attributed to Israel, sparked a flight to safety, initially boosting the JPY more than the USD.
- Inflation Eases, BoJ Remains Hawkish: Japanese CPI declined slightly in March, but BoJ Governor Ueda's hawkish comments on further rate hikes if the Yen weakens significantly support the JPY.
Technical Analysis:
- Potential Bearish Hanging Man: USD/JPY appears poised to form a bearish Hanging Man candlestick, indicating a potential short-term reversal.
- Measured Move Pattern: The recent three-wave structure suggests a Measured Move pattern, with the completion of wave C potentially near the 0.618 Fibonacci extension around 154.20.
- Overbought RSI: The Relative Strength Index (RSI) in overbought territory adds to the possibility of a pullback.
- Key Levels: A break above 154.78 could signal a continuation towards 156.11, while weakness could test support at 151.96 (top of wave A).