- Since the beginning of this week, the USD/JPY currency pair has been on a downward correction path, with losses extending to the support level of 150.45, the lowest for the currency pair in five weeks.
- Currently, it is stabilizing around the 151.60 level at the time of writing, amidst the US Thanksgiving holiday.
- The technical downward correction of the USD/JPY currency pair was natural after its recent sharp gains, which reached the resistance level of 156.75, driven by the euphoria of Trump's trade, which supported the strength of the US dollar against other major currencies.
Why Has the Japanese Yen Appreciated Recently?
The Japanese Yen price found strong momentum to achieve gains amid expectations that the Bank of Japan may raise interest rates again early next month. In this regard, Bank of Japan Governor Kazuo Ueda recently indicated the possibility of raising interest rates in December, citing concerns about the weakness of the Japanese Yen. Financial markets are now pricing in a roughly 60% chance of a 25-basis point rate hike in Japan next month, up from around 50% just a week ago. The Japanese yen will react to Friday’s release of inflation data in Tokyo, which could provide additional insights into the future direction of the Bank of Japan’s policy.
Japanese Bond Yields Decline
According to recent trading, the yield on the 10-year Japanese government bond fell to around 1.06% on Thursday, hitting a two-week low, tracking a decline in US Treasury yields as US inflation data came in in line with expectations, suggesting no major change in the path of US rate cuts. In Japan, investors are closely watching the Bank of Japan’s monetary policy stance, with speculation growing that the central bank could raise interest rates again at its meeting next month. Financial markets are pricing in a 60% chance of a 25bp rate hike next month, up from around 50% just a week ago.
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USD/JPY Technical Analysis and Expectations Today:
The bearish momentum of USD/JPY has added to the overall decline in the US dollar as US PCE inflation data came in line with expectations, suggesting a slight change in the Fed’s approach to cutting US interest rates. Technically, and based on the performance on the daily chart, the 150.00 support level will remain a dividing line for USD/JPY in the coming days. Stability below the level will encourage bears to move towards stronger support levels, the closest of which are 148.80 and 147.00 respectively. On the other hand, in the same time frame, if USD/JPY returns above the 153.60 resistance, it will be important for bulls to control the pair.
USD/JPY Signals Today:
We recommend buying the US dollar/Japanese yen from every downward level. Always be careful not to take risks and activate profit limit and stop loss orders to ensure the safety of your trading account from any price reversals that may come suddenly.
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