The following is a rewritten, expanded version of the article “USD/JPY’s Short-Term Upward Momentum Remains Strong, Daily Chart Shows” by Riva Gold, originally published in The Wall Street Journal.
Title: USD/JPY Continues Uptrend Amid Strong Technical Signals and Supportive Fundamentals
Author: Based on reporting by Riva Gold, The Wall Street Journal
Length: 1,050+ words
Overview
The USD/JPY currency pair has demonstrated strong upward momentum in recent sessions, continuing to push higher on the back of favorable macroeconomic fundamentals and bullish technical indicators. Traders and analysts have taken note of the pair’s resilience, as the U.S. dollar continues to find support against the Japanese yen, particularly in light of yield differentials between U.S. and Japanese government bonds, divergent monetary policies between the Federal Reserve and the Bank of Japan, and technical signals indicating further gains.
Short-term charts suggest the pair is still in an uptrend, with short-term support levels intact and momentum indicators largely confirming the prevailing bullish bias. The dollar-yen pair remains in buyers’ favor, with dips seen as potential buying opportunities, unless more significant technical support levels are breached.
Key Points:
– USD/JPY remains in a bullish phase, backed by rising U.S. Treasury yields and continued weakness in the Japanese yen.
– The pair continues to trade above key moving averages, reinforcing the short-term uptrend.
– Technical charts show firm support levels that have held up well on recent retracements.
– Market participants remain wary of potential interventions by Japanese authorities, although none have materialized recently.
– Monetary policy divergence between the Federal Reserve and Bank of Japan continues to weigh on the yen, while supporting the dollar.
– Risk appetite and safe-haven flows could also influence volatility in the pair in the near term.
Technical Overview
Daily chart analysis shows that USD/JPY maintains momentum in the upward direction. The pair continues to trade firmly above major technical indicators, pointing toward a continuation of the bullish trend that has defined the market over the past several weeks.
Key technical observations include:
– The spot rate remains above the 20-day and 50-day moving averages, both of which are sloping upward, indicating continued buyer interest.
– Relative Strength Index (RSI) values remain elevated but not at overbought extremes, suggesting further room for appreciation before correction pressures increase.
– Momentum indicators, including the Moving Average Convergence Divergence (MACD), confirm the bullish trend by showing rising histogram bars above the zero line and an upward-sloping signal line.
– Resistance is observed near psychologically significant levels, but the pair has shown resilience in overcoming nearby barriers.
– Support levels at recent lows and moving average thresholds have consistently provided strong footing during shallow pullbacks.
Notable Levels to Watch:
– Resistance: Around 158.00 to 159.00, a zone that has attracted profit-taking in recent weeks.
– Immediate Support: Near the 155.00 area, backed by the 20-day moving average.
– Deeper Support: Near 153.00, where the 50-day moving average converges with short-term trendline support.
Unless the pair breaks below these levels decisively, traders expect any corrections to be fleeting, with new upswings to follow.
Fundamental Drivers
The fundamental backdrop continues to favor the U.S. dollar over the Japanese yen. Several macroeconomic forces are behind the sustained strength in USD/JPY, with policy divergence and yield dynamics remaining primary drivers.
Interest Rate Differentials
The diverging interest rate policies of the U.S. Federal Reserve and the Bank of Japan continue to contribute to dollar strength:
– The Federal Reserve, while pausing its aggressive rate hikes, remains firmly in restrictive territory, keeping its policy rate at a historically high level amid sticky inflation.
– In contrast, the Bank of Japan maintains its ultra-loose monetary policy stance. Though it ended its negative interest rate policy earlier this year, the BoJ continues to
Explore this further here: USD/JPY trading.