After modest gains, it still remains shy of 145.00

VaselineAugust 29, 2024

0 2 minutes read

After modest gains, it still remains shy of 145.00

Bearish technical outlook persists; the pair remains below the Ichimoku Cloud and 200-DMA, suggesting further declines.
RSI suggests seller dominance despite a temporary buyer-led rally.
Resistance levels to watch: 145.39 (Tenkan-Sen), 146.00, 146.92 (Senkou Span A), 148.45 (Kijun-Sen).
Break below 144.00 targets 143.44 (August 26 low), with potential to test monthly low at 141.69.

USD/JPY posted modest gains during Thursday’s North American session of over 0.27%. During the trading day, the pair retreated to a daily low of 144.22, but bounced back and ended the session near the 145.00 figure. At the time of writing, major trades at 144.97 were basically flat at the start of the Asian session on Friday.

USD/JPY Price Forecast: Technical Insights

From a technical point of view, the pair is biased, despite the fact that it has registered an advance. Once USD/JPY slipped below the Ichimoku cloud and below the 200-day moving average (DMA), it opened the door for posting a multi-month low of 141.69. Since then, the major has enjoyed a surge, but has failed to gain traction to clear the 150.00 mark.

The Relative Strength Index (RSI) shows that sellers are in charge, although buyers are enjoying a short-term lead.

If USD/JPY breaks decisively above 145.00, this could pave the way for further upside. Once it moves higher, the first resistance would be the Tenkan-Sen at 145.39, followed by the 146.00 figure. Next up will be the Senkou Span A at 146.92 before testing the Kijun-Sen at 148.45.

Conversely, if sellers push the exchange rate below 144.00, the next support would be the August 26 daily low of 143.44. A breach of the latter will expose the August monthly low of 141.69.

USD/JPY Price Action – Daily Chart

Frequently Asked Questions about the Japanese Yen

The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is largely determined by the performance of the Japanese economy, but more specifically by Bank of Japan policy, the difference between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the yen. The BoJ has intervened directly in currency markets on occasion, generally to depress the yen, although it refrains from doing so because of the political concerns of its main trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the yen to depreciate against its major peers. This process has been exacerbated more recently by a widening policy divergence between the Bank of Japan and other major central banks, which have opted to raise interest rates sharply to combat decades-high levels of inflation.

The BoJ’s stance of sticking to ultra-loose monetary policy has led to increased policy divergence with other central banks, particularly the US Federal Reserve. This supports a widening of the spread between US and Japanese 10-year bonds, which favors the US dollar against the Japanese yen.

The Japanese yen is often seen as a safe investment. This means that during periods of market stress, investors are more likely to put their money into the Japanese currency due to its supposed reliability and stability. Troubled times are likely to strengthen the value of the yen against other currencies considered riskier to invest in.

VaselineAugust 29, 2024

0 2 minutes read

USD/JPY Price Forecast: Technical Insights

USD/JPY Price Action – Daily Chart

Frequently Asked Questions about the Japanese Yen

Vaseline

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