USD/JPY Price Forecast: Slips on soft US PMIs, drops below 144.00

USD/JPY falls to 143.45 after reaching a daily high of 144.46, pressured by softer US data fueling Fed rate cut speculation.
Technical outlook remains bearish, with momentum favoring sellers as the pair fails to clear resistance at 143.81 (Kijun-Sen).
Key support levels include the Senkou Span A at 142.92 and the Tenkan-Sen at 142.03, with further downside targeting 141.73 and 139.58.

Christian Borjon Valencia FXStreet

The USD/JPY snapped two days of gains and dropped late in the North American session following softer-than-expected US economic data, fueling rate cut speculation by the Federal Reserve. At the time of writing, the pair trades at 143.45 after hitting a daily high of 144.46.

USD/JPY Price Forecast: Technical outlook

From a technical standpoint, the USD/JPY is downward biased despite printing a leg-up after bouncing from the September 16 low of 139.58 to the September 20 high of 144.49. It should be said that the rally continued to remain capped by the Kijun-Sen at 143.81, opening the door for further losses.

Momentum remains negative, as the Relative Strength Index (RSI) portrays. Therefore, tha path of least resistance is tilted to the downside.

The first support would be the Senkou Span Aat 142.92, followed by the Tenkan-Sen at 142.03, before challenging the September 20 swing low of 141.73. If surpassed, the USD/JPY could aim toward the September 16 pivot low of 139.58.

Conversely, if USD/JPY buyers move in and push prices above 144.00, further upside lies above the September 20 high of 144.49.

USD/JPY Price Action – Daily Chart

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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