For three consecutive trading sessions, the USD/JPY exchange rate has moved in a downward retracement path, with losses. It moved towards the support level 129.80, amid selling operations, a rebound from the resistance level 134.45.
In general, the Japanese yen is still stimulated by the sudden action of the Central Bank of Japan Towards tightening, as the global central bank has been sticking to negative interest rates for a long time, and it seems that the continued high inflation in the country forced the bank to adjust its policy.
The Japanese yen started 2023 trading with modest gains
Investors were weighing the risks of further technical strength amid light holiday trading. The Japanese currency rose 0.3% to 130.77 per dollar in early Tokyo trading. A close below USDJPY's August low of 130.41 would open doors for further declines in the pair, according to chart watchers.
Some investors have opened short dollar positions on the chance of a breakout in the absence of normal market liquidity, said some Asia-based forex traders and transaction insiders who asked not to be identified because they are not authorized to speak publicly. Overall, the yen rose nearly 16% from its October low amid government intervention, hopes for a slower rate hike in the US and speculation about the possibility of a policy shift from the Bank of Japan this year. The Bank of Japan's surprise decision in December to adjust yield curve control parameters is seen by many as a sign that its ultra-easy monetary policy may be coming to an end soon.
Hyperinflation in 2022 is proving too heavy a burden for American families, especially in the middle class. Family budgets were pushed to the limit even in cases with two salaried earners. Over the year, the low- and high-income segments performed relatively well, or at least better than those in the middle class. The purchasing power of paychecks decreased by 2.9% for middle-income households in 2022 compared to 2021, while it increased by 1.5% for the lowest five of households and 1.1% for the highest.
Forecasts of the US dollar against the yen today:
- The recent losses of the USD/JPY currency pair reached its lowest level in six months.
- These losses were sufficient to push the technical indicators towards oversold levels, according to the performance on the daily chart.
- However, if the momentum of the Japanese yen continues, the currency pair may move towards support levels.
- Deeper and more important ones are currently 129.80 and 128.00, respectively, which are levels where you can think about buying without risk, waiting for the moment of rebound and correction to the upside.
On the other hand, and according to the performance over the same time period, the bulls must return to the vicinity of the resistance 134.50 again, in order to move in the ascending channel that was formed recently, prior to the Christmas and New Year holidays.
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