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Is it me, or is USD/JPY showing a nice uptrend on the 1-hour chart? I’ve found a setup for those who are looking to add to their long dollar trades!

While I’m still biting my nails over my long GBP/USD trade, I see that USD/JPY is finding support from a rising trend line on the 1-hour time frame. What’s more, the 100 and 200 SMAs seem to be tracking the overall direction!

This time around the pair is back to its weekly open prices. No big surprise since the 114.00 psychological mark seems to have attracted both bulls and bears in the past.

With stochastic almost hitting the oversold level, is it time for the Greenback to extend its uptrend against the yen?

USD/JPY 1-hour Forex Chart
USD/JPY 1-hour Forex Chart

Fundamentals seem to be pointing in that direction. For starters, today’s U.S. advanced GDP report left expectations eating dust by clocking in at 3.0% in Q3 2017 when analysts only pegged a 2.5% gain. More importantly, the GDP price index – which some correlate to inflation and rate hike expectations – came in at 2.2% against 1.7% growth estimates.

And then there’s Trump’s pick for the next Fed Governor. If the latest Hollywood-style market speculations are correct, Trump could give his final rose (read: approval) to either John Taylor or Jerome Powell as early as next week.

Either choice could boost the Greenback since Powell could represent continuation of Yellen’s slow and steady approach to tightening, while Taylor is seen as a more aggressive hawk.

Last but not the least is the GOP’s progress on tax reform. Now that they won’t have to play nice with the Dems in order to further their tax reform, it would be easier to see a #throwback of the post-election days when promises of tax reform (among other things) boosted the Greenback.

Meanwhile, Japan just printed its latest inflation numbers. Unfortunately for Kuroda and his gang, the 0.7% annualized CPI growth is still way behind the BOJ’s 2.0% goal. That means lower (rates) for longer!

Anyway, I’ll be keeping close tabs on this short-term setup next week. I could enter at the first signs of a bounce or short at a downside breakout. What do you think?

See also:
My Q4 2016 Forex Trade Review and Reflections
HLHB System’s 2016 Performance Summary

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