The Future of the USD/JPY Pair: An Analysis

The Future of the USD/JPY Pair: An Analysis

The USD/JPY pair has recently stabilised around 151.35, prompting verbal interventions from Japanese authorities due to the weakening of the Japanese yen. Finance Minister Shunichi Suzuki mentioned the likelihood of measures to normalise the yen, citing excessive volatility as a concern for trading partners and businesses. Monetary policy official Masato Kanda also expressed that the current weakness of the yen is not reflecting fundamental factors and labelled recent depreciation waves as speculative. Japan is closely monitoring currency movements and is prepared to respond appropriately to yen volatility.

Bank of Japan’s Actions

Last week, the Bank of Japan raised its interest rate for the first time in 17 years, ending eight years of negative interest rates. This move was anticipated by the capital market as the BoJ had prepared for it meticulously. The central bank intends to maintain an accommodative monetary policy for an extended period, which is expected to act against the yen’s value.

Technical Analysis of USD/JPY

On the H4 chart of USD/JPY, a growth wave to 151.85 has been completed, with the market currently forming a consolidation range below this level. A downward breakout from this range could lead to a correction to 149.12, followed by a new growth wave to 152.70. The MACD oscillator supports this scenario with its signal line directed downwards.

On the H1 chart of USD/JPY, a narrow consolidation range has formed around 151.31, with a downward breakout expected to continue the correction to 150.75. Breaking through this level could potentially lead to reaching 149.20, followed by an increase to 151.85. The Stochastic oscillator confirms this scenario, preparing for a decline to 20 with its signal line below 80.

The future of the USD/JPY pair seems to be influenced by both Japanese authorities’ interventions and the actions of the Bank of Japan. While uncertainties remain, technical analysis suggests possible scenarios for the movement of the currency pair in the near future. Traders and investors should closely monitor these factors to make informed decisions in the ever-changing forex market.

Technical Analysis

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