USDJPY moved slightly to the upside on Friday, but it was mostly just a spike, despite higher US yields which raises the question of whether the pair is starting to lose momentum. The price action clearly shows a potential five-wave move up from the December lows, which could now be ready to complete its recovery. If US yields would also hit some resistance this week, then it would likely have a bearish impact on the US dollar, and in that case, USDJPY could fall sharply, especially considering the Japanese yen is currently stronger compared to other currencies. However, this strength of JPY could also be driven by risk-off flows.
From an Elliott Wave perspective, I see the potential for a wedge formation on the USJDPY hourly chart that could push the pair back toward the 156 area.
