- USD/JPY’s bearish trend continues as downside momentum accelerates following volatile US Nonfarm Payrolls data.
- Key support levels include 142.50, 142.00 and today’s low of 141.77, with further downside likely if these levels are broken.
- Resistance lies at 143.44, with higher targets at 144.49 (Tenkan-Sen) and 145.00 (Senkou Span A) if bulls regain control.
The USD/JPY extended its losses at the end of the North American session on Friday, boosted by losses in the 10-year US Treasury bond yield. The Dollar regained some ground against most G8 currencies, except for safe haven currencies like the Japanese Yen. At the time of writing, the pair is trading at
USD/JPY Technical Outlook
The bearish trend in USD/JPY continued after the latest US Nonfarm Payrolls report triggered volatility in the pair, which oscillated within a 230-pip range on the day, but once the dust settled, sellers remained in command.
Momentum had accelerated to the downside, confirmed by the relative strength index (RSI) pointing downwards, an indication of a strong trend.
The first support for the USD/JPY would be the psychological level of 142.50. Once overcome, the next stop would be the 142.00 level, followed by today’s low of 141.77. Once those two levels are cleared, the decline could extend towards the August 5 low of 141.69.
On the other hand, the first resistance would be the August 26 daily low of 143.44. A break of the latter would expose key resistance levels. First, the Tenkan-Sen will be at 144.49, followed by the Senkou Span A at 145.00. Next would be the Kijun-Sen at 145.73.
USD/JPY Price Action – Daily Chart
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by the performance of the Japanese economy, but more specifically by the policy of the Bank of Japan, the spread between Japanese and US bond yields, and risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key to the Yen. The BoJ has intervened directly in currency markets on occasion, usually to lower the value of the Yen, although it often refrains from doing so due to political concerns of its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its major currency peers. This process has been exacerbated more recently by a growing policy divergence between the BoJ and other major central banks, which have opted to sharply raise interest rates to combat decades-old levels of inflation.
The Bank of Japan’s stance of maintaining an ultra-loose monetary policy has led to an increase in policy divergence with other central banks, in particular with the US Federal Reserve. This favours the widening of the spread between US and Japanese 10-year bonds, which favours the Dollar against the Yen.
The Japanese Yen is often considered a safe haven investment. This means that in times of market stress, investors are more likely to put their money into the Japanese currency due to its perceived reliability and stability. In turbulent times, the Yen is likely to appreciate against other currencies that are considered riskier to invest in.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
