USD/JPY Bullish Breakout — How High Can It Go?

USDJPY busted through the top of its ascending triangle pattern, indicating that an uptrend is in the works. Technical indicators are also pointing to more gains for the pair.

Price broke above the resistance at the 145.00 major psychological mark during the BOJ decision, as the central bank refrained from making any policy changes. This follows the FOMC decision during which the US central bank hiked interest rates by 0.75% for the third time in a row and reiterated their plans to keep tightening.

With that, USDJPY could be in for a climb that’s the same height as the chart pattern or around 500 pips. The 100 SMA is above the 200 SMA to signal that the path of least resistance is to the upside or that more upside is likely.

The pair is also trading above both moving averages, so these could hold as dynamic support on dips. The SMAs are located close to the triangle bottom and 144.00 major psychological support.

Stochastic is pointing up to confirm the presence of bullish pressure, and RSI is heading higher as well. However, both oscillators are dipping into the overbought region to reflect exhaustion among buyers. Turning lower would suggest that sellers are returning, and this might lead to a retest of the broken triangle top.

Dollar demand has picked up again this week, as traders priced in the likelihood of a hawkish FOMC statement. In addition, safe-haven flows stemming from Russian President Putin’s declaration of partial military mobilization also drove the US currency higher.

Meanwhile, the BOJ decision turned out to be disappointing for yen bulls since the central bank proved to be “all bark and no bite.” After weeks of trying to jawbone the yen to prevent more declines, the central bank fell short in terms of taking actual policy action.

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