- USD/JPY is gaining momentum but is struggling to overcome Wednesday’s high of 146.90, leaving the pair range-bound.
- A break above 146.92 could lead to resistance at 147.00 and the August 15 high at 149.39, with 150.00 being an important target.
- If the sellers push the pair below 144.45, the downtrend could continue, with support at 141.69.
USD/JPY gained in late North American trading on Thursday following a choppy session on Wednesday that saw the pair fluctuate around 145.20. The rise in US Treasury yields boosted the pair, which gained over 0.66% or 95 pips to trade at 146.24.
USD/JPY Price Forecast: Technical Outlook
After printing a long-legged doji, USD/JPY is aiming higher but fails to reach Wednesday’s high at 146.90, keeping the pair range-bound. The momentum favors the sellers, with the Relative Strength Index (RSI) remaining bearish. However, buyers are gaining momentum as the RSI is aiming higher.
For the uptrend to continue, USD/JPY needs to break the Tenkan-sen at 146.92. Once this is overcome, the next resistance would be at 147.00, followed by the recent cycle high of August 15 at 149.39. If these levels are broken, buyers could retest the 150.00 mark.
On the other hand, the ongoing downtrend could resume once sellers push prices below the August 21 low of 144.45. In this case, USD/JPY could crash towards the August 5 swing low of 141.69.
USD/JPY price development – daily chart
Frequently asked questions about the Japanese yen
The Japanese yen (JPY) is one of the most traded currencies in the world. Its value is largely determined by the performance of the Japanese economy, more specifically by the policies of the Bank of Japan, the difference between Japanese and US bond yields or the risk appetite of traders, among other factors.
One of the Bank of Japan’s responsibilities is currency control, so its actions are crucial for the yen. The BoJ has sometimes intervened directly in foreign exchange markets, generally to lower the value of the yen, although it often refrains from doing so due to political concerns among its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive economic stimulus, has led to a depreciation of the yen against its major counterpart currencies. This process has recently worsened due to a growing policy divergence between the Bank of Japan and other major central banks, which have opted to raise interest rates sharply to combat decades of high inflation.
The BoJ’s stance of maintaining its ultra-loose monetary policy has led to a growing divergence in its policies with other central banks, particularly the US Federal Reserve. This is leading to a widening of the spread between the US and Japanese 10-year bonds, favoring the US dollar against the Japanese yen.
The Japanese yen is often viewed as a safe haven asset. This means that during times of market stress, investors are more likely to put their money into the Japanese currency because it is seen as reliable and stable. Turbulent times are likely to strengthen the yen’s value against other currencies that are considered riskier.
