**Japanese Yen and Australian Dollar Forecast: USD/JPY Dips Ahead of Key Japan Trade Data**
*Original article by James Hyerczyk, FXEmpire*
As the foreign exchange market continues to respond to macroeconomic developments and central bank policy signals, the Japanese Yen (JPY) and the Australian Dollar (AUD) remain in sharp focus. The USD/JPY pair saw a modest decline on early Tuesday, with traders eyeing upcoming Japanese trade data for further direction. The Aussie, meanwhile, remains rangebound as markets digest the Reserve Bank of Australia’s (RBA) latest policy stance.
Below is a comprehensive overview of key market drivers influencing these two major currencies and their technical outlooks.
## USD/JPY: Market Sentiment and Upcoming Trade Data
The Japanese Yen has shown a slight strengthening against the US dollar early in the Asian session on Tuesday. This movement comes ahead of the anticipated release of Japan’s trade balance report, a potential market-moving event.
### Key Factors Influencing the Yen
– **Japan’s Trade Data (Due Wednesday):**
Market participants are closely monitoring Japan’s upcoming trade figures, expected to have substantial implications on JPY positioning:
– Exports are projected to rise 13% year-over-year in May.
– Imports are anticipated to increase by 10.4% compared to the same time last year.
– The trade balance is expected to show a surplus of 339 billion yen.
A positive surprise in these figures could strengthen the yen further, especially if the trade surplus exceeds analyst forecasts.
– **Monetary Policy Divergence:**
Despite the recent mild appreciation of the yen, it remains largely weak relative to global peers due to the Bank of Japan’s (BoJ) ultra-loose monetary policy.
– In contrast, the US Federal Reserve maintains elevated interest rates, bolstering USD-denominated assets.
– Investors are watching for any signals from the BoJ about potential policy normalization, though such changes are currently viewed as tentative.
– **Speculative Pressure:**
The Yen’s ongoing weakness over recent months has invited speculation in the market that Japanese authorities may intervene. The yen hit a 34-year low versus the dollar in April, prompting a round of suspected intervention by Japanese officials to stabilize the currency.
– **Geopolitical and Economic Context:**
Broader macroeconomic developments, including geopolitical risk and global inflation trajectories, continue to play a role in dictating yen movement. Safe-haven flows may return to the JPY if risk-off sentiment returns.
## USD/JPY Technical Outlook
The pair is currently trading near a critical resistance zone that restricted upward momentum in the past few sessions. Analysts continue to monitor price action closely for sustained breakouts or reversals.
### Technical Analysis Summary:
– **Near-Term Resistance Levels:**
– 158.35: Previous high and current short-term resistance.
– 158.70: Breach above this level could suggest renewed bullish momentum.
– **Support Levels:**
– 157.50: Psychological and technical support.
– 157.00: A sustained break below could drive further selling pressure.
– **Moving Averages:**
– The 50-day Simple Moving Average is trending higher, signaling medium-term bullish sentiment.
– However, the Relative Strength Index (RSI) signals overbought territory, suggesting that a pullback may be imminent unless supported by fundamentals.
– **Volume and Momentum:**
– Momentum indicators show some bearish divergence, with falling momentum despite price rising. This points to potential weakness in the uptrend.
Traders are likely to stay cautious ahead of Wednesday’s Japan trade report, with broader risk sentiment and Treasury yields also guiding direction.
## AUD/USD: Aussie Dollar Stuck in Tight Range
Meanwhile, the Australian Dollar continues to tread water, as limited domestic economic data and steady RBA commentary create a narrow trading environment. The AUD/USD pair has shown little directional conviction,
Explore this further here: USD/JPY trading.