USDJPY may have a significant turn this week
USD has found a bid in the last 24 hours and the upwards move looks set to continue.
Various reasons are being given for the recovery, including a blow out in the LIBOR-OIS spread. See here.
The main event on the US data card today will be the price index of personal consumption expenditures (PCE), the Fed’s inflation benchmark, for the period ending February.
Following on from the CPI release a couple of weeks ago, the annual core rate may show a modest rise from 1.5% to 1.6% - nothing to get excited about.
From an Elliott Wave perspective, the USD is interpreted as being in the final stages of a complex corrective structure extending from its 118.60 peak of January 2017 and it is possible that this week’s 104.60 low has been a key turning point (refer to daily chart).
To validate this reversal possibility, I will be closely monitoring the USD's short-term wave structure over the coming days, for evidence of the completion of an initial “impulsive” (Bullish) 5 Wave sequence from this week’s 104.60 low.
Entry: Until 107.00 is cleared, Dollar is seen as a buy about 106.55/106.40
Stop: below 106.00, initially
Target: 50% at 107.43 and 50% at 107.86
Time horizon: allow several days for both targets to be met
USDJPY Daily Chart (click to expand)