USDJPY recovers, downtrend conditions
A sharp shift in Japan's monetary policy, geopolitical tensions in the Middle East and disappointing US jobs data have pressured global markets since last Friday. .
The yen's rapid rise began last Wednesday, when the Bank of Japan raised interest rates and laid out a plan to gradually taper its bond-buying program.
The US dollar fell nearly 5% against the yen last week and fell further on Monday. However, it recovered slightly by 0.09% on Tuesday and continued to recover on Wednesday. USD/JPY is currently trading around 147.
There is a reason the yen could give up recent gains as the market may accept expectations of a US interest rate cut, but it will be more difficult to digest expectations of Japan continuing increase interest rates.
Tuesday's data showed Japanese households remained cautious and will struggle to boost aggregate demand enough to keep inflation at 2%. Therefore, it will be difficult for the Bank of Japan to fulfill its desire to continue the cycle of increasing interest rates.
However, this is only a subjective assessment, because everything from Japan needs additional information from the BOJ to be able to fully evaluate the path.
On the weekly chart,
USDJPY recovered above 146.385 and above the 0.50% Fibonacci retracement level. However, these recovery levels are not enough for USD/JPY to have bullish conditions when the confluence of the trend price channel (a) and the 0.382% Fibonacci level will be the current closest resistance.
For USD/JPY to gain further upside it needs to bring price activity above the 0.382% Fibonacci retracement level and then the target level of around 153,760 price points is the confluence of Ema21 and 0.236% Fibonacci retracement.
Meanwhile, once USD/JPY is sold off again below 144.520 it will continue to move towards 140.401 in the short term.
Currently, technical position conditions for USD/JPY remain bearish with notable technical levels listed below.
Support: 144,992 – 144,520
Resistance: 148,654
The yen's rapid rise began last Wednesday, when the Bank of Japan raised interest rates and laid out a plan to gradually taper its bond-buying program.
The US dollar fell nearly 5% against the yen last week and fell further on Monday. However, it recovered slightly by 0.09% on Tuesday and continued to recover on Wednesday. USD/JPY is currently trading around 147.
There is a reason the yen could give up recent gains as the market may accept expectations of a US interest rate cut, but it will be more difficult to digest expectations of Japan continuing increase interest rates.
Tuesday's data showed Japanese households remained cautious and will struggle to boost aggregate demand enough to keep inflation at 2%. Therefore, it will be difficult for the Bank of Japan to fulfill its desire to continue the cycle of increasing interest rates.
However, this is only a subjective assessment, because everything from Japan needs additional information from the BOJ to be able to fully evaluate the path.
On the weekly chart,
USDJPY recovered above 146.385 and above the 0.50% Fibonacci retracement level. However, these recovery levels are not enough for USD/JPY to have bullish conditions when the confluence of the trend price channel (a) and the 0.382% Fibonacci level will be the current closest resistance.For USD/JPY to gain further upside it needs to bring price activity above the 0.382% Fibonacci retracement level and then the target level of around 153,760 price points is the confluence of Ema21 and 0.236% Fibonacci retracement.
Meanwhile, once USD/JPY is sold off again below 144.520 it will continue to move towards 140.401 in the short term.
Currently, technical position conditions for USD/JPY remain bearish with notable technical levels listed below.
Support: 144,992 – 144,520
Resistance: 148,654
Komen
Komen
USD/JPY is trading below the 50-day and 200-day EMA, confirming the bearish bias. If USD/JPY recovers to 142.5, it will open up the possibility of testing the resistance area at 143.49. In case of overcoming the threshold of 143.49, buyers can push the exchange rate towards the next resistance mark at 145.89. It is important to note the impact of Japanese GDP figures and key US economic indicators. Conversely, if the exchange rate falls below 142, it could trigger stronger selling momentum, towards the support area of 141.03. The 14-day RSI is at 32.46, showing that USD/JPY may continue to fall to the 142 area before entering an oversold state.
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