Original article by Adam Button, adapted and expanded.
USD/JPY Technical Analysis: Market Eyes Fed Chair Powell’s Comments
The USD/JPY currency pair remains firmly in traders’ focus as market participants await critical commentary from Federal Reserve Chair Jerome Powell. His upcoming speech is expected to provide new signals about the future trajectory of US interest rates. The pair continues to trade close to the 145.00 mark, a level that is stimulating increased attention due to its historical significance and potential policy implications.
Market Sentiment and Current Position of USD/JPY
The dollar-yen pair has maintained upward momentum over recent months, driven mainly by diverging monetary policy between the US Federal Reserve and the Bank of Japan. The Fed has taken a more hawkish stance, while the BOJ has held on to its ultra-loose monetary policy. This divergence has provided tailwinds for the USD.
– USD/JPY is currently trading around 144.85, slightly retreating from the recent high of 145.07 reached earlier in the week.
– The pair has climbed steadily from 138.00 levels, indicating a persistent bullish structure supported by US economic resilience.
– Traders remain cautious around the 145.00 level, which previously attracted attention from Japanese authorities, raising concerns over potential intervention.
Historical Significance of the 145.00 Level
– The 145.00 mark is not just a psychological resistance but also a technical and political threshold.
– In September 2022, Japanese authorities intervened once USD/JPY crossed the 145.00 level, aiming to curb excessive yen depreciation.
– Since then, traders have viewed this price as a potential zone where policy makers may step in, either verbally or through direct action.
Understanding the slight hesitation near this level is key to understanding broader market behavior:
– Traders are unwilling to overextend long positions in USD/JPY due to the risk of sudden selling pressure.
– Japanese officials have recently remained relatively silent, but their posture could shift quickly if the yen weakens further.
Technical Analysis: Chart Outlook for USD/JPY
The technical structure of USD/JPY has supported the recent uptrend.
– On the daily chart, USD/JPY shows strong support at 144.00 and 143.50, with the 50-day moving average currently resting near 141.50.
– Resistance remains pronounced at 145.00 – a breach above this level could open a path to the next resistance at 146.50 and possibly higher towards 148.00.
– Momentum oscillators, like RSI, are edging towards overbought territory, suggesting consolidation or a potential retracement might occur ahead of new data inputs.
Key Technical Levels:
Support:
– 144.00: Near-term support that has held in recent sessions.
– 143.50: A secondary level that has provided technical buying interest.
– 141.50: 50-day moving average, which could serve as a medium-term floor.
Resistance:
– 145.00: Critical technical and psychological resistance.
– 146.50: Previous swing high and potential next target.
– 148.00: Longer-term resistance area.
Market Participants Await Powell’s Remarks
Much of this week’s price action and sentiment hinges on comments expected from Federal Reserve Chair Jerome Powell.
– The Fed’s policy outlook remains uncertain, as mixed economic data has hindered investor conviction.
– Inflation has moderated but remains above target, while labor market figures continue to show strength.
– During his last public appearance, Powell maintained a data-dependent tone, leaving the door open for future hikes depending on inflation and employment trends.
If Powell adopts a more hawkish tone during his upcoming remarks:
– Expect traders to bid USD/JPY higher, potentially breaking above the 145.00 and targeting 146.50.
– A decisive upward move could trigger a buying wave across other USD pairs as well.
Conversely, if Powell’s commentary appears dovish:
– The USD may retreat slightly, with downward pressure emerging
Explore this further here: USD/JPY trading.