As the USD/JPY chart shows, the pair posted solid bullish momentum in the second half of February. This move was driven by a combination of fundamental factors, including:
Expectations of a softer yen led to renewed weakness in the currency (A→B), forming the upward trajectory highlighted in purple.
However, on Wednesday the pair retreated, which appears to be an interim pullback from point B. Technical analysis of the USD/JPY chart suggests that extending the move along the purple trajectory may prove challenging.
Therefore, it cannot be ruled out that the lower purple boundary may be breached by bears, potentially leading the market into a period of consolidation while awaiting fresh economic and political catalysts.
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