- The sharp uptrend in the price of the US dollar against the Japanese yen USD/JPY continued, with gains reaching the resistance level of 154.44, the highest for the currency pair in 34 years.
- It surpassed levels of Japanese intervention in currency markets to halt the collapse of the Japanese yen, as was the case in the latest steps.
USD/JPY performance is facing pressure from the strong dollar price, as stubborn inflation in the United States has raised concerns that the Federal Reserve will keep interest rates high for longer. This contrasts with other major global central banks, which are expected to start easing soon, while the Bank of Japan has indicated that it will maintain its accommodative monetary settings for some time. Also, the Bank of Japan has ruled out using rate hikes to support the yen. These developments came even after Japan ended eight years of negative interest rates and scaled back asset purchases.
Meanwhile, Japanese Finance Minister Shunichi Suzuki said he was monitoring currency movements closely, reiterating that authorities were "fully prepared" to respond appropriately.
On the other hand, US stock market indices closed in the red on Monday, extending the previous week's losses. According to stock trading platforms, the Dow Jones fell 248 points, the S&P 500 fell 1.2%, and the Nasdaq fell 1.8%. Investors were digesting US retail sales for March, which came in above expectations, suggesting that interest rates may stay higher for longer than expected.
Also, concerns about potential Israeli retaliation weighed on markets, following Iranian missile and drone strikes on Israel over the weekend.
On the other hand, the earnings season has entered its second week, with Goldman Sachs shares jumping by 2.9% after announcing a 28% jump in first-quarter profits. Charles Schwab rose 1.7% after earnings and revenue slightly beat estimates, while JP Morgan rose. Conversely, Tesla stock fell by 5.6% after news that the company was laying off more than 10% of its workforce around the world. Apple stock fell by 2.2%.
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USD/JPY Technical Analysis and Expectations Today:
Amid the continuation of the sharply bullish outlook, the strongest focus will remain on Japan’s next steps to stop the collapse of the price of the Japanese yen. So far, the intervention is still verbal and the gains of the US dollar against the Japanese yen “USD/JPY” continue, as the factors of strength of the US dollar against the rest of the other major currencies continue and expand. Technically, the general trend may remain upward until there is actual Japanese intervention in the markets to prevent the collapse of the yen exchange rate. According to the current trend, the closest resistance levels will be 154.65, 155.20, and 156.00, respectively, and I still prefer to think about selling the currency pair without risk.
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