USD/JPY: Risk deteriorates but 114.50 still endorsed

Cycles & Levels: On the weekly, we’ve come to a huge level of resistance that encompasses a wide area from 114.00 up to 115.00. The buy-side dynamics heading into this level makes the outlook to be constructive for now. On the daily, the current buy-side campaign continues to develop in line with an up-cycle which has its next target at 114.37 ahead of 114.52 daily resistance. On the hourly, the buy-side dynamics are indisputable, with a series of hourly support levels where liquidity to reinstate longs will be found. Special mention deserves prices sub 113.50, as a static support sees the confluence with an ascending trendline. The order flow on the hourly continues to be supportive of higher levels too, as depicted by the motion of price dynamics (steeper on the way up).

Correlations & Volumes: One of the hurdles faced by buyers is the deterioration of the risk environment, also reflected by a lower US vs JP yield spread. The context to see higher prices is far from being negated though, as even if sell-side interest continues to re-emerge, it looks more logical for the next liquidity at 114.50+ to first be reached in line with the over-ruling component of price structures, which continues to be unambiguously bullish.