USDJPY: Next step short towards 143!

As a trader monitoring the recent movements of the USD/JPY currency pair, I've observed several key factors affecting its dynamics:

Japanese Yen Weakness: The Yen has shown a consistent decline against the US Dollar, reaching a three-week low. This trend reflects reduced expectations for a hawkish policy shift by the Bank of Japan (BoJ) in January. The absence of aggressive policy changes from the BoJ has contributed to the Yen's weakness.

US Dollar Strength: The US Dollar has gained strength, partly due to diminished expectations of aggressive easing by the Federal Reserve. This shift has propelled the USD/JPY pair beyond the 145.00 threshold.

Technical Analysis: From a technical perspective, the USD/JPY pair shows potential for further gains. It has surpassed the 38.2% Fibonacci retracement level of its recent downturn. With daily chart oscillators gaining positive momentum, a move beyond the 145.00 level could lead to further gains, potentially towards the 145.50 or even the 146.00 mark.

Support and Resistance Levels: On the downside, the pair seems to have decent support before the 144.00 mark. However, a break below this level could lead to technical selling, exposing the 200-day Simple Moving Average around 143.25-143.20, which is a critical pivot point for future movements.

Impact of External Events: An earthquake in Japan on New Year’s Day has made it more challenging for the BoJ to abolish negative interest rates. This event has indirectly affected the Yen. Additionally, the performance of US Treasury yields, influenced by Federal Reserve policies, is playing a role in supporting the USD.

Future BoJ Policies: Although there's speculation that the BoJ might shift from ultra-loose monetary policies later in 2024, possibly after annual wage negotiations in March, this remains uncertain. Such a shift could positively impact the Yen.

Influence of Equity Markets and Nonfarm Payrolls (NFP) Report: The tone of the equity markets and the upcoming US monthly jobs data (NFP) could provide further direction. The NFP report is particularly significant as it might offer clues on the trajectory of the Federal Reserve's interest rates, which will affect the dynamics of the USD.

Forecast:
The price is currently at the 144.62 level, and I expect a descent to the 143.20 and 142.80 areas, where the price might rotate before further rises. On the chart, I have highlighted my expectation with some technical elucidation. Wishing everyone a good evening and a great start to the week, regards from Nicola.