- USD/JPY closes unchanged at 143.58, forming a ‘doji’ candle, signaling indecision amid geopolitical risks.
- The RSI suggests possible consolidation, with the pair expected to trade between 142.98 and 144.53 in the near term.
- A break above 144.53 could target 145.00 and the 50-day DMA at 145.47, while a fall below 142.98 exposes the support level of 141.65.
On Tuesday, USD/JPY formed a ‘doji’ and ended the day unchanged around 143.58. During the session, the pair oscillated in a range of around 150 pips before ending the trading day with minimal gains of 0.02%.
USD/JPY Technical Outlook
The bearish trend remains intact. Although the pair was heading to maintain losses, USD/JPY rebounded on risk aversion amid Iran’s attack on Israel. That sponsored a push toward the current exchange rate.
The Relative Strength Index (RSI) favors further declines, although its slope is flat. This hints at consolidation ahead. That said, USD/JPY could trade within the 142.98-144.53 area in the near term.
If buyers break the top of the range, that will expose 145.00, followed by the 50-day moving average (DMA) at 145.47. A break of the latter will expose the bottom of the Kumo around 147.80-148.00.
Conversely, if USD/JPY falls below 142.98, the September 30 cycle low at 141.65 will be exposed. With further weakness, the next stop would be the September 16 pivot low at 139.58.
USD/JPY Price Action – Daily Chart
The 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 differential between the yields of Japanese and US bonds or the risk sentiment among traders, among other factors.
One of the mandates of the Bank of Japan is currency control, so its movements are key for 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 the 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 depreciation of the Yen against its main currency pairs. This process has been exacerbated more recently by a growing policy divergence between the Bank of Japan 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 ultra-loose monetary policy stance has led to increased policy divergence with other central banks, particularly the US Federal Reserve. This favors the widening of the spread between US and Japanese 10-year bonds, which favors 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 in the Japanese currency due to its supposed 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.
