- During the week, the USD/JPY is recording gains of almost 3%.
- A risk-off market mood has not been an excuse for the buck to keep trending higher, underpinned by elevated US Treasury yields.
- USD/JPY Price Forecast: To consolidate before resuming upwards.
The Japanese yen continues weakening against the greenback as USD buyers mount against the weakest currency in the G10, also weighed by higher US Treasury yields, widening the bond spread between both countries. At 134.42, the USD/JPY lurks at the 135.00 psychological level, which analysts and former Japanese policymakers mentioned could trigger intervention in the Forex market.
At the time of writing, the US 10-year Treasury yield sits at 3.00%, flat in the day. Meanwhile, the US Dollar Index, a gauge of the greenback’s value, rises 0.21%, currently at 102.545, a tailwind for the USD/JPY.
Sentiment-wise, Asian equity futures are mixed, with Japanese and Australian stock exchanges ready to open with losses. Chinese markets are poised for a higher open. Concerns about central banks tightening monetary policy might spur an economic slowdown loom.
On Wednesday, the USD/JPY opened near the session’s lows around 132.50 and rallied nonstop until the North American open, when it dipped towards 133.60, before resuming above 134.00.
USD/JPY Price Forecast: Technical outlook
The USD/JPY daily chart depicts the pair as upward biased, despite the parabolic upward move, from 126.86 to 134.40s, reaching a 20-year high. However, USD/JPY traders need to be aware that the last leg-up was printed on weaker momentum, as the Relative Strength Index (RSI) begins to show a negative divergence between the major’s price action and the oscillator. Therefore, the USD/JPY might pull back before resuming the uptrend.
That said, the USD/JPY first support would be the psychological 134.00 mark. Break below would expose the June 8 low at 132.54, followed by the May 9 high at 131.34.
Key Technical Levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD stalls ahead of Reserve Bank of Australia’s decision
The Australian Dollar registered minuscule gains compared to the US Dollar as traders braced for the Reserve Bank of Australia monetary policy meeting. A scarce economic docket in the United States and a bank holiday in the UK were the main drivers behind the “anemic” AUD/USD price action. The pair trades around 0.6624.
USD/JPY extends recovery above 154.00, focus on Fedspeak
The USD/JPY pair trades on a stronger note around 154.10 on Tuesday during the Asian trading hours. The recovery of the pair is supported by the modest rebound of US Dollar to 105.10 after bouncing off three-week lows.
Gold rises as US job slowdown dampens Treasury yields
Gold price rallied close to 1% on Monday, late in the North American session, bolstered by an improvement in risk appetite due to increased bets that the US Federal Reserve might begin to ease policy sooner than foreseen. The XAU/USD trades at around $2,320 after bouncing off daily lows of $2,291.
Ethereum traders show uncertainty following huge whale sale, Robinhood Crypto Wells notice
Ethereum holdings on centralized exchanges continue to decline despite recent whale sales. With Robinhood Crypto as the latest recipient of the SEC's Wells notice, Ethereum spot ETFs look more unlikely.
RBA expected to leave key interest rate on hold as inflation lingers
Interest rate in Australia will likely stay unchanged at 4.35%. Reserve Bank of Australia Governor Michele Bullock to keep her options open. Australian Dollar bullish case to be supported by a hawkish RBA.