USDJPY remains bullish over the medium term and might remain poised to push through 112/50 and 113.00 levels going forward. In the near term though, the currency might drop through 108.50 mark, before terminating Wave (4) as labelled on the chart here.
USDJPY has been rallying against 102.59 lows registered on January 06, 2021. It is expected to terminate above 111.75 at least, to complete the corrective (A)-(B)-(C) rally that had begun since 101.18 level in March 2020 earlier.
A larger degree Wave (C) has been unfolding as an impulse (5 wave) since 102.59 lows. Please also note that USDJPY bulls have already managed to terminate Waves (1), (2) and (3) around 104.40, 103.30 and 111.74 levels respectively.
Since then, a larger degree Wave (4) has been unfolding and it might have terminated close to 109.00/10 levels on July 19, 2021. If the above structure holds well, USDJPY might have resumed Wave (5) higher against 109.00 levels.
Alternately, if Wave (4) is still unfolding as a complex correction, USDJPY bears might still remain inclined to drag below 109.00 levels in the near term. Either from here or 108.50 levels, traders might be inclined to remain long.
USDJPY could be progressing into a counter trend rally toward 114.30-50 zone in the next few trading sessions.
Gold dropped to $1770 mark on Tuesday before finding some support. The yellow metal is still testing its intermediate trend line support connecting $1721 and $1758 levels respectively.
The US dollar index carves a meaningful top around 96.88 mark over the last week. The index reversed sharply on Friday confirming a bearish Evening Star candlestick pattern on the daily chart.