**USD/JPY Price Forecast: Rebounds Above 153.00 as Buyers Regain Control**
*Adapted from FXStreet article by Felipe Erazo*
The USD/JPY currency pair has rebounded above the key psychological level of 153.00, marking a shift in momentum as buyers re-enter the market. The pair had previously experienced a corrective pullback amid speculation over potential Japanese intervention. However, USD/JPY has managed to recover significantly, supported by strong US economic data and diverging monetary policy expectations between the Federal Reserve and the Bank of Japan (BoJ).
This analysis delves into the technical, fundamental, and macroeconomic factors influencing the recent move, underpinning the outlook for USD/JPY in the near and medium term.
Key Drivers Behind the USD/JPY Rebound:
– **BoJ’s Dovish Stance**: The Bank of Japan continues to maintain an ultra-loose monetary policy, preserving negative interest rates. This divergence from other central banks, particularly the Federal Reserve, has placed persistent downside pressure on the Japanese Yen. The recovery of USD/JPY is partially attributed to renewed confidence that the BoJ will not shift policy aggressively in the near term.
– **Strong US Economic Data**: The US economy continues to display resilience, with robust employment figures and inflation readings suggesting the Federal Reserve may maintain higher interest rates for longer. Recent data releases have reinforced expectations of a “higher for longer” rates scenario, which supports the US Dollar.
– **Broad USD Strength**: The rebound in USD/JPY is also a reflection of wider US dollar strength across the currency markets. Amid global uncertainty and strong US fundamentals, investors continue to buy the greenback, driving upward pressure on USD/JPY.
– **Market Sentiment Shift**: After breaching 153.00, the shift in trader sentiment and risk appetite has favored the dollar as investors return to buying USD/JPY. Concerns over intervention from Japanese authorities had previously weighed on prices, but abating fears have allowed momentum to resume on the upside.
Technical Analysis
According to the market structure set out on the daily chart, USD/JPY prices had temporarily softened after a strong rally earlier in the year. However, following a brief consolidation near the 151.50–152.00 region, bullish momentum resumed. The move above 153.00 is technically significant for several reasons.
Key technical elements to watch include:
– **Resistance Turned Support**: The psychological level of 153.00 acted as resistance on several occasions. With USD/JPY now comfortably above this level, traders will view it as a potential support zone on any pullbacks.
– **Trend Continuation**: The pair remains well above its 200-day moving average, reinforcing the medium-term uptrend. There is no immediate sign of breakdown.
– **Momentum Indicators**: RSI (Relative Strength Index) on the daily chart is currently moving toward overbought territory but has not reached critical levels, suggesting there is still room for further gains.
– **Next Resistance Levels**:
– 154.00: A round psychological number that market participants may target.
– 154.80–155.00: The recent multi-decade highs in USD/JPY. A break above this zone could open the door to further upside.
– **Support Zones**:
– 153.00: Now considered initial support on any downside retracements.
– 152.20–152.50: Secondary support area, aligned with previous short-term highs.
– 151.50: The recent low before the rally resumed.
Market Expectations and Monetary Policy Outlook
Markets remain fixated on central bank decisions, particularly the policy divergence between the Bank of Japan and the Federal Reserve. This divergence has long been a key theme influencing USD/JPY dynamics.
Federal Reserve:
– The Federal Open Market Committee (FOMC) has consistently communicated its intent to keep interest rates higher for an extended period to control
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