USD/JPY: Navigating the Sideways Trend for Potential Upside – A Detailed Look at My Long Setup

Olá a todos! Mariana Souza here, bringing you my latest market insights. Today, I want to walk you through my analysis on USD/JPY, a pair that has been on my watchlist for some time now. While the market currently shows a sideways trend, I believe there are several factors at play here, both fundamental and technical, that point towards a potential long opportunity.

Fundamental Tailwinds for the Dollar

The bigger picture is important, especially when trading on a position timeframe. Despite the current consolidation, the fundamental divergence between the monetary policies of the U.S. Federal Reserve and the Bank of Japan remains a powerful driver for USD/JPY. The Fed continues to maintain a relatively hawkish stance, with market expectations shifting towards a "higher for longer" narrative regarding interest rates. This is in stark contrast to the Bank of Japan, which, while making incremental adjustments, is still operating with negative interest rates and a very cautious approach to policy normalization. This significant interest rate differential continues to make the carry trade highly attractive, favouring the U.S. Dollar over the Japanese Yen. As long as this divergence persists, the underlying fundamental pressure on USD/JPY will remain skewed to the upside.

Technical Structure and My Trade Setup

Let me walk you through my analysis of the