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- The USD/JPY pair rose to 160.89, up 0.08%, supported by strong US data and higher Treasury yields.
- Technical indicators show buyer momentum; RSI is in overbought territory but not extreme.
- Resistance levels: 161.00, 162.00, 164.87 (November 1986 high), 178 (April 1986 high).
- Support is found at 159.19 (Tenkan-sen), 158.75 (Jun 24 low), 158.65 (Sinkou Span A), 157.91 (Kijun-sen).
The USD/JPY pair extended its gains on Friday and is set to end the week with gains of more than 0.50% after… US economic data This sent US Treasuries higher, despite growing speculation that the US Federal Reserve may cut interest rates. Rates In 2024. USD/JPY is trading at 160.89, up 0.08%.
USD/JPY Price Analysis: Technical Analysis
The uptrend for USD/JPY remains intact, although traders are cautious after the recovery of the 160.00 psychological level, which is seen as the first line of defense for Japanese authorities to intervene in the forex markets. Despite this, the pair continued to advance steadily, increasing the risks of intervention.
Momentum favors buyers, although the Relative Strength Index (RSI) is in overbought territory. However, given the strength of the uptrend, many technicians consider the 80 level to be the threshold for “extreme” overbought conditions.
The first resistance levels for USD/JPY will be the psychological marks at 161.00, 162.00, etc., leading up to the November 1986 high of 164.87. Furthermore, the next important resistance is the April 1986 high of 178.
Conversely, if USD/JPY falls below 160.00, the first support will be the Tenkan-Sen at 159.19, followed by the June 24 low at 158.75. Once these levels are crossed, the next support will be Senkou Span A at 158.65, followed by Kijun-Sen at 157.91.
USD/JPY Price Action – 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, but more specifically by the policy of the Bank of Japan, the spread between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is to control the currency, so its actions are key to the yen. The BOJ has intervened directly in currency markets on occasion, generally to depreciate the yen, though it has often refrained from doing so due to political concerns in its major trading partners. The BOJ’s current ultra-loose monetary policy, which relies on massive economic stimulus, has caused the yen to weaken against major currencies. This process has been exacerbated recently by growing policy divergence between the BOJ and other major central banks, which have opted to raise interest rates sharply to combat decades-high inflation.
The Bank of Japan’s ultra-loose monetary policy stance has widened policy divergences with other central banks, especially the US Federal Reserve. This is supported by a widening spread between US and Japanese 10-year bonds, which favors the US dollar versus the Japanese yen.
The Japanese yen is often viewed as a safe investment. This means that in times of market stress, investors are more likely to put their money into the Japanese currency because of its supposed reliability and stability. Turbulent times are likely to strengthen the value of the yen against other currencies that are considered riskier to invest in.
