- USD/JPY briefly breaks above 148.00 before reversing, with the RSI suggesting seller dominance.
- A drop below 146.27 could trigger further losses, with targets at 145.44 and 144.28.
- If USD/JPY reclaims the 147.79 level, resistance levels lie at 148.00 and possibly 149.77, with the 200-day moving average at 151.46 being the longer-term target.
The Japanese yen is failing to gain ground against the greenback towards the end of the North American session, with the USD/JPY pair rising from last Friday’s intraday low of 146.62 to trade at 147.28, up 0.47%.
USD/JPY Price Forecast: Technical Outlook
USD/JPY has been trending lower despite the uptrend that saw the pair surpass the 148.00 level and hit a six-day high at 148.22 before reversing course and falling below the Tenkan-sen at 147.79.
The Relative Strength Index (RSI) remains bearish, suggesting that momentum is in favor of sellers.
USD/JPY could extend its losses if the pair breaks below the August 9 low of 146.27. Once this is overcome, the next demand zone would be the August 8 low of 145.44, followed by the August 7 low at 144.28. Next would be the last cycle low at 141.69.
Conversely, if USD/JPY clears the Tenkan-sen at 147.79, it will clear the way to the August 12 highs of 148.00. Further strength could push the pair towards the Sekou Span A at 149.77 before testing the 200-day moving average (DMA) at 151.46.
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.
