Author – Mr.Amar – Technical Analyst

The dollar was supported by fresh bets on US interest rate hikes on Tuesday, while investors dumped the yen, sending it below the psychological 120 level, as the Bank of Japan looks increasingly isolated in its dovish policy stance. The yen fell 0.8% to hit a six-year low of 120.46 in Tokyo this afternoon after losing more than 4% against the dollar this month as US yields fell, prices soared and a deteriorating trade balance was sucking cash out of the world’s third-largest economy. The environment of rising interest rates undermined the yield-sensitive Japanese Yen, with USD/JPY hitting a 6-year high.

Japan must maintain an ultra-loose monetary policy to keep inflation from hurting the economy, BOJ Governor Haruhiko Kuroda said Tuesday, in stark contrast to harsh comments from Federal Reserve Chair Jerome Powell. The USD/JPY pair is in the throes of an adrenaline rush, which will be very evident in Tuesday’s open session. The pair opened at 119.460 and quickly moved higher. The asset is up nearly 0.7% in today’s session and is yet to show any signs of exhaustion. It is worth noting that the asset renewed its six-year high after kissing 120.470 on this morning.

Technically, on a weekly basis, USD/JPY has witnessed a gigantic rally after the ascending channel broke to the upside. The upper end of the ascending channel is located at 110.970 from the April 2021 high, while the lower end is marked from January 2021 low at 102.590. Additionally, the asset also broke its five-year resistance at 118.660. If the major tests its bottom at 118.66, an accumulation of fresh offers will propel the pair towards psychological resistance at 120.00, followed by a 5th Feb 2016 high at 121.49.