Original article by: Daniel Dubrovsky, published on Forex Factory
Link: https://www.forexfactory.com/news/1352135-usdjpy-price-prediction-analysis
USD/JPY Technical Analysis and Price Prediction
The USD/JPY currency pair has remained in focus for traders amid continued volatility driven by global central bank policy divergence and macroeconomic developments. The Japanese yen has been under pressure in the foreign exchange markets as the U.S. dollar continues to rise on the back of strong economic indicators and hawkish rhetoric from the Federal Reserve. By contrast, the Bank of Japan’s (BoJ) dovish stance is limiting yields in Japan, thereby weakening the yen.
This article presents an in-depth analysis of USD/JPY technical and fundamental conditions, potential scenarios, and areas of interest for forex traders in the upcoming sessions.
Overview of Recent Price Action
– USD/JPY recently tested the 2022 high around the 151.95 level, which had previously acted as a ceiling for the pair.
– Price action remains elevated, with bullish momentum pushing the pair toward new highs…
– There was a brief pullback early last week due to broad-based dollar weakness, but the move was limited, and buyers quickly stepped back in.
– BoJ intervention watch remains a key factor, especially around psychologically important levels like 152.00.
Factors Influencing USD/JPY Movement
1. Federal Reserve Policy:
– The Fed has signaled a prolonged period of elevated interest rates to combat sticky inflation.
– Recent economic data from the U.S., particularly labor market and CPI figures, have reaffirmed the Fed’s confidence in the stability of the economy.
– This has contributed to rising U.S. Treasury yields, enhancing the appeal of the greenback, especially against low-yielding currencies like the yen.
2. Bank of Japan Policy:
– BoJ maintains an ultra-loose monetary policy, with interest rates still in negative territory.
– While adjustments have been made to the yield curve control (YCC) framework, the bank has not signaled any imminent tightening.
– Governor Kazuo Ueda has expressed caution toward removing stimulus too early, reinforcing the perception that Japan’s monetary policy will remain accommodative in the near term.
3. Intervention Risk:
– Traders must remain cautious around the 152.00 level, as this was approximately the point where Japanese authorities intervened in 2022.
– There is little official communication hinting at imminent intervention, but speculative excess could prompt future action.
– Japan’s Finance Minister Shunichi Suzuki noted that authorities are monitoring FX movements, feeding into market speculation that intervention is possible if the yen continues to depreciate sharply.
Technical Indicators and Chart Patterns
The charts illustrate a persistent bullish bias in USD/JPY, which continues trading in an ascending channel with key technical support levels developing along the way.
Key support and resistance levels include:
– Resistance:
– 151.95: The former 2022 high and the most immediate resistance level.
– 152.00: A psychological barrier with historical significance.
– Sustained moves above this level could open the door to price discovery, where further upside targets are less defined by historical data.
– Support:
– 149.90: A short-term pivot providing initial support.
– 148.90: The 20-day simple moving average (SMA), now acting as dynamic support.
– 147.25: The 50-day SMA and a former accumulation zone.
– 145.90: Overlapping historical resistance-turned-support level that may come into play with deeper pullbacks.
– Trendlines:
– The pair is still within a clear upward channel since late summer, with sloping support holding firm.
– No clear pattern reversal has presented itself on the daily chart, solidifying the case for a continuation of the prevailing trend barring any fundamental shocks.
Momentum Indicators:
– RSI (Relative Strength
Explore this further here: USD/JPY trading.