- Since the beginning of today's trading session (Thursday), the USD/JPY exchange rate has been subjected to selling pressure.
- It is starting from the resistance level of 157.66 and extending losses to the support level of 156.53 at the time of writing.
- According to forex trading platforms, the Japanese yen has rebounded from its four-week low as broad selloffs in risky assets have led to the yen being bought as a safe haven.
- Also, the yen found support from rising domestic yields, with Japan’s benchmark 10-year yield reaching 1.1% this week for the first time since July 2011.
Earlier this week, Bank of Japan board member Seiji Adachi indicated that the central bank might raise interest rates if the sharp decline in the yen leads to further inflation.
The Question Now: Can the USD/JPY Reach 160?
USD/JPY is approaching the intervention zone as it rises above the 157.00 level. Will we witness a retest of the 160.00 resistance level?
In this regard, asks Fouad Razaqzadeh, market analyst at City Index and FOREX.com. According to trading, the US dollar rose again, after the sudden rise in US consumer confidence in May, the strengthening of bond yields, and the continued tightening of the Federal Reserve. Therefore, our short-term expectations for the USD/JPY pair remain bullish amid the current policy stance of the Bank of Japan, the strong upward trend for the USD/JPY pair, and the strength of the US dollar in general.
At above the 157.00 level, the USD/JPY pair has now entered the intervention zone in the forex market, although the slow movement contrasts with such an action given Japan’s stated interest in the speed of the yen's depreciation rather than the specific level it trades at. Thus, we may not see any action until the USD/JPY reaches the 160.00 level. The faster we reach there, the more likely we are to see intervention.
At the end of last month, we saw the USD/JPY pair fall by a whopping 5 figures after the Japanese Ministry of Finance, with the help of the Bank of Japan, sold billions of dollars of its reserves. After that, the high was just above the 160.00 high as well. Overall, USD/JPY remains in a strong uptrend as shown for example by the price remaining comfortably above the 21-day EMA. Moreover, USD/JPY has recorded temporary higher highs and higher lows since it fell from the 160.00 level following suspected intervention from the Bank of Japan at the end of April.
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USD/JPY Technical Analysis and Expectations Today
Regarding the support levels to watch, the first level is around 156.55, which previously served as resistance. Below that, the focus is on the 156.00 level, where the impact of the 21-day exponential moving average begins. Next is the 155 level, which is the last major support. Also, coincides with the upward trendline. On the upside, there is no significant resistance until the 158.00 level, which is the highest level since May 1st, when the dollar clearly declined against the yen following the second round of intervention by the Bank of Japan. Above this level, the focus is on the 160.00 level, just below the April high of 160.21.
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