- USD/JPY breaks key resistance, trading at 149.31, as high US yields and dovish comments from the PM support the pair.
- The Relative Strength Index (RSI) suggests room for further upside, with the August 15 high of 149.39 and 150.00 as the next targets.
- Key support lies at 147.35, with sellers aiming to push the pair below the Ichimoku Cloud at 146.40-60 and the Tenkan-Sen at 145.50.
USD/JPY recovered and surpassed 149.00 for the first time since mid-August, supported by the jump in US Treasury yields due to their close positive correlation with the pair. This and the dovish comments from the next PM Ishiba led to a rise in the pair, which is trading at 149.31.
USD/JPY Price Forecast: Technical Outlook
USD/JPY is neutral to bullish biased after breaking key resistance levels such as the 50-day moving average (DMA) and entering the Ichimoku Cloud (Kumo).
Momentum suggests that buyers remain in control via the Relative Strength Index (RSI). It should be said that the RSI is still far from being overbought, an indication that the pair could extend its gains.
If USD/JPY extends its gains above the August 15 high of 149.39, the figure of 150.00 will be exposed. With more strength, the pair could challenge the 200-DMA at 151.39.
On the other hand, sellers will need to take USD/JPY below the latest cycle low on the daily chart, being the October 8 low of 147.35. Once broken, the pair could challenge the bottom of the Kumo at 146.40-60, before the Tenkan-Sen at 145.50.
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.
