- The USD/JPY currency pair failed to rebound upwards during yesterday's trading, failing to exceed the 145.17 level.
- Also, the Japanese Yen soon resumed its gains, stabilizing around the 143.95 level at the beginning of today's Wednesday session.
- Furthermore, the pair's movements came despite geopolitical risks in the Middle East driving demand for safe-haven assets for both currencies.
- Likewise, the Japanese yen continued to receive support from the divergent monetary policies between Japan and the United States.
Last week, Bank of Japan Governor Kazuo Ueda told parliament that the Japanese central bank may adjust monetary policy if its economic forecasts prove correct, indicating its readiness to raise interest rates again. On the other hand, US Federal Reserve Chairman Jerome Powell said in his speech in Jackson Hole that it is time to adjust policy amid increasing risks to the Labor market, while expressing confidence that inflation will return to the US central bank's 2% target.
According to economic analysts, investors are now looking to July industrial production, retail sales, and unemployment figures, as well as August Tokyo inflation figures to guide economic and interest rate expectations in Japan.
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On the stock trading front, Japanese stocks rose in a broad-based advance. According to trading, the Nikkei 225 index of Japanese stocks rose by 0.47% to close at 38,289 points. Meanwhile the broader TOPIX index rose by 0.73% to close at 2,681 points on Tuesday, erasing losses incurred earlier in the session, with all sectors participating in the advance. In general, the decline in the yen helped Japanese stocks as investors continued to assess the divergent monetary policies between the Bank of Japan and the Federal Reserve.
Also, hopes that Nvidia’s earnings this week will boost AI helped. Index heavyweights such as Mitsubishi Heavy Industries (4%), Mitsui E&S (8.7%), Seven & I Holdings (4.1%), Toyota Motor (1.8%) and Sony Group (2.8%) were strong performers. Meanwhile, technology stocks were mostly lower including LaserTech (-4.3%), Disco Corp (-2.1%) and Tokyo Electron (-0.9%).
USD/JPY Technical analysis and Expectations Today
Based on the daily chart, the USD/JPY exchange rate is still in its broader downtrend and the next support levels will be 141.65 and 140.00 respectively which will move the technical indicators towards strong oversold levels. On the other hand, and for the same time frame, the psychological resistance of 150.00 will remain the most important for bulls to regain control of the trend. Obviously, the USD/JPY rate will continue to be influenced by the path of global central bank policies as well as investors' appetite for risk or lack thereof.
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