US dollar is trading higher across the board based on a hawkish Fed, after good US NFP figures last week. The next key event to watch is the US CPI data. This will be an important event for traders' decision to see if inflation is slowing down or will Fed have to be even more aggressive. If the CPIs retreat somewhat, we think US yields will drop if the United States 10-Year notes break above the horizontal resistance. And this can then be a trigger for a drop in the USD/JPY.
From an Elliott Wave perspective, we see an ending diagonal, a reversal pattern. Usually, you will see a strong reversal in a trend when the ending diagonal is finished. It will occur when lower trendline support and wave (4) swing supports are broken. For now, that's not the case, so it's too soon for any "reversal" to be confirmed, but it's good to have it in mind while pairing trades below 140.40. That's an invalidation level as wave three must not be the shortest.
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