- At the beginning of this week’s trading, the USD/JPY exchange rate settled around 158.00, stabilizing amid strong selling pressure it faced since last week, which caused it to plummet from the resistance level of 161.90, the lowest price for the yen in 38 years, extending losses to the support level of 157.37.
- Thus, the USD/JPY is expected to remain on its current downward trajectory pending the reaction to the announcement of US inflation figures.
According to reputable trading platforms, the Japanese yen stabilized at 158 yen per dollar in light trading, with traders remaining on high alert after the currency rose about 2% last week due to suspected intervention by Japanese authorities. Last week, the yen rose to 157.36 yen per dollar following lower-than-expected US inflation figures and Bank of Japan data indicating that the government may have spent up to 3.57 trillion yen on Thursday to support its currency. Analysts warned that Monday’s holiday might lead to another round of yen buying by Japanese authorities to take advantage of weak liquidity, like what they did in late April.
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On the monetary policy front, investors are looking ahead to the Bank of Japan’s policy meeting in late July where it is expected to announce plans to scale back bond purchases and possibly raise interest rates again. Externally, the yen has been pressured by a stronger dollar that has benefited from safe-haven bids after the assassination attempt on former U.S. President Trump.
Regarding stock trading platforms, US stock futures rose on Monday, with S&P 500 futures up 0.5%, the Dow Jones up 230 points, and the Nasdaq up 0.5%. This performance came as traders digested the assassination attempt on Donald Trump, which allegedly increased his chances of winning the US presidential election.
According to trading, shares of the Trump media and technology conglomerate jumped more than 48% in pre-market trading. Meanwhile, earnings season is in full swing this week, with Goldman Sachs adding nearly 0.7% before the opening bell after beating earnings and revenue. Also, BlackRock rose 1.1% after reporting an 11% increase in second-quarter earnings. Among the major companies, Apple (2%), Nvidia (1.3%) and Amazon (0.1%) were in the green, while Tesla rose more than 3%. In contrast, Microsoft stock fell (-0.2%) while Meta and Alphabet traded around the flat line.
USD/JPY Technical analysis and Expectations Today
Based on the performance on the daily chart attached, USD/JPY trading pair is still on its downward path. Technically, breaking the support of 158.00 will increase the bears’ control over the trend and will confirm the bearish shift over that period if the currency pair moves towards the support levels of 155.70 and 153.00 respectively. Decisively, this requires Japanese intervention in the forex market in addition to the continued weakness of the dollar price following the announcement of lower-than-expected US retail sales this week. In contrast, and over the same period, the psychological resistance of 160.00 will remain the most important for the bulls to regain control over the trend.
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