The Japanese yen (JPY) pairs rallied in 2022. In particular, the USD/JPY was in a sustained bullish market that started with a breakout above 116 and ended last October when the exchange rate exceeded 151.
The Bank of Japan intervened in the FX market, and the market quickly reversed. So abrupt was the reversal that the USD/JPY retraced more than 2,000 pips since the 2022 high.
The next Governor of the Bank of Japan, Kazuo Ueda, will take office in April for the next five years. On Friday, he is scheduled to deliver a speech, and the market will focus on finding out his views about the yield curve control policy.
What does technical analysis say? More precisely, what does Elliott Waves show, as the markets expect to hear from the future Bank of Japan Governor, his view about the monetary policy?
USD/JPY to trade again above 140
The Elliott Waves theory divides the market moves into impulsive and corrective. Impulsive waves have a five-wave structure, and corrective waves have a three-wave structure.
A quick look at the drop from the 2022 highs tells us that the move was corrective and not impulsive. Because of that, two scenarios are possible, both bullish in the short and medium term for the USD/JPY pair.
One is that the market forms a contracting triangle as the fourth wave of an impulsive move of a larger degree. In that case, the a-wave has already ended, and the b-wave typically retraces more than 61.8% of it.
Another is that it forms a flat pattern for the same fourth wave. In a flat, the b-wave must retrace a minimum of 61.8% of the previous a-wave.
Therefore, in both cases, the current bounce should extend beyond 61.8%, meaning that the USD/JPY has the potential to trade above 140 sooner rather than later.
Can the market make a new high above 151? The answer is yes, it can, but only after the fourth wave ends, which is unlikely to happen until the second half of 2023.
Source: https://invezz.com/news/2023/02/21/usd-jpy-price-forecast-ahead-of-uedas-speech/