USD/JPY will struggle to produce more gains as investors become convinced they have discounted all of the rate hikes the Fed can deliver in this cycle, but trend highs will remain in play as long as it closes above 134.27 and the daily tenkan at 134.10.
USD/JPY is already relatively close to its measured objective off 2021's lows at 138.62, limiting substantial gains.
The post-Fed slide in Treasury yields capped USD/JPY at this month's twin peaks at 136.71 on EBS and triggered a 23.6% retracement of the May-June rise with Thursday's low.
USD/JPY edged higher on Friday due to a modest bounce in Treasury yields and a further rebound in stocks, which dimmed safe-haven yen demand.
University of Michigan data failed to advance debate over peak fed funds, but next week's PCE and ISM data may provide important details.
Markets may become increasingly data-dependent and USD/JPY more of a range trade rather than the one-sided move up since March, with the 138.62 Fibo target and offers into 140 capping.
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