Title: Extended Analysis: USD/JPY Mid-Day Outlook – April 30, 2024
Original article by ActionForex.com
As the American trading session continues on April 30, 2024, USD/JPY movements remain a focal point for traders and technical analysts. The pair hovers within a short-term consolidation zone beneath a recent high marked by 160.20. This level acts as a formidable barrier, temporarily halting further bullish momentum. Yet overall market structure suggests underlying strength, driven largely by hawkish Fed expectations, contrasting with the Bank of Japan’s ongoing ultra-loose monetary policy.
This extended analysis breaks down the recent technical developments, broader trend implications, and key levels to watch in the days to come.
Short-Term USD/JPY Technical Analysis
– USD/JPY is currently capped below the recent rally high of 160.20.
– Intraday bias remains neutral at the start of the US trading session.
– A consolidation phase appears to be developing around current price levels after a strong bullish run.
– The nearest support is identified at 155.98, a recent low formed during a mild pullback.
– A decisive break below 155.98 would signal that a short-term correction phase is likely underway.
– If such a pullback deepens, it could extend down toward the 151.86 cluster, which includes:
– The 151.86 support level, a tangible previous resistance-turned-support area.
– The 38.2% Fibonacci retracement level of the rally from 140.24 to 160.20.
Trend Continuation or Correction?
Despite short-term hesitation below 160.20, the broader trend remains firmly bullish:
– The medium- and long-term direction favors the USD, reflecting the enduring divergence in monetary policy stances between the Federal Reserve and the Bank of Japan.
– Upside momentum remains intact as long as the price action holds above the 151.86 support zone.
– A confirmed break through 160.20 would open further upside potential, with psychological resistance likely forming near 162.00 and beyond.
Daily and Weekly Indicators
Technical readings across daily and weekly charts support the prevailing uptrend:
– On the Daily chart:
– The pair trades well above its 20-day and 50-day simple moving averages (SMAs), a classic bullish signal.
– RSI (Relative Strength Index) remains within higher boundaries, indicating continued buying interest but not yet at extreme overbought thresholds.
– On the Weekly chart:
– MACD lines are aligned bullishly and widening, reflecting growing momentum.
– The weekly RSI has also moved into the higher half of its range, yet remains below the overbought line, suggesting further room to run.
Fundamental Backdrop: Policy Divergence Remains a Key Driver
The ongoing strength in USD/JPY is deeply anchored in monetary policy divergence:
1. The Federal Reserve’s Position:
– The Fed has maintained a firm tone regarding inflation risks, suggesting that rate cuts will not be immediate.
– US economic indicators, including GDP growth and labor market strength, have outperformed expectations, further reducing the urgency for policy easing.
– Market expectations increasingly indicate a delay in any monetary easing to late 2024.
2. The Bank of Japan’s Stance:
– The BoJ continues to proceed cautiously despite tweaking some policies.
– It recently ended its yield curve control (YCC) framework, but rates remain near historical lows.
– Inflation pressure in Japan, though gradually stabilizing near the 2% target, is not robust enough to justify an aggressive rate hike cycle.
– Consequently, the yen remains undermined by ultra-loose domestic monetary conditions combined with global capital outflow in search of higher yields.
Geopolitical and Market Flow Influences
The broader macroeconomic and geopolitical landscape also supports the USD/JPY rally:
– The dollar benefits from a safe-haven status during rising global
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