- The USD/JPY pair experienced another week of upward momentum, with gains extending to the resistance level of 157.92, the highest for the currency pair in five months.
- The week's trading closed around 156.42 amidst strong bull control over the trend.
- The increasing strength of the US dollar may push the trend towards the psychological resistance of 160.00 before the end of 2024.
- Furthermore, diverging policies of central banks worldwide and the extent of investor risk appetite are the main factors affecting the performance of the currency pair.
US Dollar Near Two-Year High
Despite a decline in the US dollar price after the announcement of the US Federal Reserve's preferred US inflation reading, it is still near its two-year high amid declining expectations of US interest rate cuts by the Federal Reserve in 2025. According to forex market trading, the US dollar has risen to new highs following news that Republican lawmakers have dropped a previously agreed-upon spending bill, raising the spectre of a government shutdown over the weekend.
The US dollar's gains also came in the wake of the Federal Reserve's decision in the middle of last week, when interest rates were cut, but policymakers said they expect only two interest rate cuts in 2025.
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The dollar price against the US dollar will remain on its upward path until Japan intervenes in the exchange markets to stop the yen's collapse
US Stocks Continue to Gain
According to stock trading platforms, US stock indices rose on the last day of 2024. According to trading, the S&P 500 index rose by 1%, the Nasdaq index rose by 0.8%. Meanwhile, the Dow Jones index gained 497 points. The gains of the US stock indices came on the heels of the preferred US inflation reading for the US Federal Reserve. Obviously, after that the Personal Consumption Expenditures index in November showed an increase of 2.4% on an annual basis, which is slightly below expectations. This helped ease market concerns raised by the Federal Reserve's expectations of cutting US interest rates in 2025.
Investor sentiment was also affected by the threat of a US government shutdown and the pressures facing global financial markets due to threats of tariffs. According to last week's trading, all three major US stock indices fell by 2.3%, with the Dow Jones recording its worst week since 2023.
Stock investors' sentiment was also affected by the threat of a US government shutdown and the pressure on global financial markets due to tariff threats. According to last week's trading, all three major US stock indices fell by 2.3%, with the Dow Jones recording its worst week since 2023.
USD/JPY Technical Analysis and Expectations Today:
According to the performance on the daily chart, the general trend of the US dollar against the Japanese yen USD/JPY is still bullish, exceeding the resistance of 158.00, moving the relative strength index towards strong overbought levels. Moreover, the MACD indicator has the opportunity to achieve stronger gains before reaching the overbought peak. Furthermore, the strength factors of the currency pair are present and will remain until a technical downward correction occurs. We do not rule out a move towards the psychological peak of 160.00. In contrast, and in the same period of time, the bearish shift of the USD/JPY pair will begin by returning to the support level of 151.50 again. Ultimately, we still prefer to buy USD/JPY from every downward level without risk and activate profit limit and stop loss orders to ensure the safety of the trading account from any sudden price reversals.
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