Chart Image: USD/JPY Triangle Consolidation Near December Highs

USD/JPY looks poised to test a resistance level that could make or break its weekly consolidation!

Will the pair make a move to the January highs before the end of the year?

Or is USD/JPY setting up for a bearish reversal instead?

The U.S. dollar retreated slightly after U.S. inflation reports came in cooler than expected on Thursday, boosting expectations for more Fed rate cuts.

The Japanese yen did not fare so well, depreciating against its major peers even after the Bank of Japan raised a widely expected interest rate hike.

Remember that movements in the direction and conditions of market price volatility are usually driven by fundamental factors. If you haven’t done your homework yet US dollar and Japanese yenthen it’s time to check the economic calendar and stay up to date with the daily fundamental news!

USD/JPY has been trading in an uptrend this week and is now touching the 156.00 psychological handle. This area coincides with the resistance of the descending triangle that has kept the bulls in check since late November.

A clean break above this trendline resistance line could set up USD/JPY for a return to the psychological 157.00 mark with the possibility of an extension to 158.00 if the bullish momentum persists.

On the other hand, a turn lower from the 156.00 zone would keep the pattern intact. A sustained trade below the 100 and 200 SMA on the 4-hour chart could trigger fresh selling pressure and drag USD/JPY down to the 154.50 area. This move would also increase the risk of a downward breakout from the descending triangle.

Whichever bias you trade, remember to practice proper risk management and watch for top-level catalysts that can affect overall market sentiment.

Disclaimer:
Please note that the technical analysis content provided here is for informational and educational purposes only. It should not be construed as trading advice or offering any particular direction. Technical analysis is only one aspect of a comprehensive trading strategy. The technical setups discussed are meant to highlight potential areas of interest for other traders to observe. Ultimately, all trading decisions, risk management strategies and their resulting results are the sole responsibility of each individual trader. Trade responsibly.