USD/JPY Exchange Rate: Technical Analysis


The USD/JPY’s Recent Challenges

The USD/JPY pair recently faced a formidable adversary—selling pressure. This abrupt turn of events disrupted its triumphant three-day rally, which had previously propelled it to year-to-date peaks. The primary concern here is the potential intervention by the Japanese government in a bid to shore up the weakening Japanese Yen (JPY). This, in turn, exerted additional downward pressure on this currency pair.

Adding to the equation is the lackluster performance of the US Dollar (USD), further intensifying the challenges faced by USD/JPY. As a result, the pair currently hovers at levels last witnessed in October 2022, teetering within the range of 150.75-150.80 achieved in the previous trading session. Despite remaining above the psychological threshold of 150.00, traders are in a holding pattern, anxiously awaiting the release of the US PCE Price Index before making any definitive moves.

Speculation Surrounding Japanese Government’s Intervention

As we navigate these uncertain waters, speculation looms large regarding potential Japanese government intervention in foreign exchange markets. The aim is clear: curbing further depreciation of the Japanese Yen (JPY). This speculation, combined with the subdued performance of the US Dollar (USD), exerts mounting pressure on the USD/JPY pair.

However, it’s imperative to recognize a significant divergence in the monetary policy outlook between the Federal Reserve (Fed) and the Bank of Japan (BoJ). This divergence is expected to temper the downside to some extent. In the coming days, investors are likely to proceed with caution due to scheduled central bank events. The Bank of Japan (BoJ) is set to meet on Tuesday, followed by the pivotal FOMC decision on Wednesday.

USD/JPY Technical Outlook

Shifting our focus to the technical side of things, the recent decline in the previous trading session displayed resilience just below the 100-hour Simple Moving Average (SMA), positioned around the 150.00 mark. This level now serves as a critical pivot for intraday traders. If the USD/JPY pair breaches this level, it may gain momentum in its descent toward the ascending trend-line support located around the 149.65 area. A prolonged downtrend could trigger further bearish sentiment, paving the way for a descent towards the intermediate support level at 149.30, potentially setting the stage for a drop to the 149.00 round figure.

The Potential for Further Declines

The journey downwards could potentially extend further, approaching the next significant support level at approximately 148.70, progressing toward the horizontal zone at 148.25, and eventually targeting the milestone of 148.00. A more substantial decline might lead the USD/JPY pair to the 147.30-147.25 region, or even a revisit to the monthly low recorded on October 3.

Exploring the Upside Potential

Conversely, at the other end of the spectrum, we find the year-to-date peak, nestled within the 150.75-150.80 range and achieved just the other day. It now stands as an immediate barrier before the 151.00 threshold. The potential for sustained buying momentum could propel the USD/JPY pair towards the coveted 152.00 mark or even the multi-decade high reached in October 2022.

USD/JPY H1 Chart Outlook




In conclusion, the USD/JPY exchange rate embarks on a turbulent journey, influenced by a combination of factors, including speculations of government intervention and the performance of the US Dollar. The technical analysis paints a picture of potential downward movements, but the possibility of breaking through certain barriers keeps hope alive. Traders eagerly await upcoming central bank events for further insights and guidance.

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