USD/JPY Price Forecast: Downtrend resumes boosted by falling US yields

Source Fxstreet
  • USD/JPY downtrend continues, as downward momentum accelerates after volatility from US Nonfarm Payrolls data.
  • Key support levels include 142.50, 142.00, and today’s low of 141.77, with further downside likely if these are breached.
  • Resistance stands at 143.44, with higher targets at 144.49 (Tenkan-Sen) and 145.00 (Senkou Span A) if bulls regain control.

The USD/JPY extended its losses late on Friday's North American session, bolstered by the losses of the yield of the US 10-year T-note. The Greenback recovered some ground against most G8 FX currencies, except safe-haven currencies like the Japanese Yen. At the time of writing, the pair trades at

USD/JPY Price Forecast: Technical outlook

The USD/JPY downtrend continued after the latest US Nonfarm Payrolls report sparked volatility in the pair, which seesawed within a 230-pip range on the day, but as the dust settled, sellers remained in charge.

Momentum had accelerated to the downside, confirmed by the Relative Strength Index (RSI) aiming lower, an indication of a strong trend.

The USD/JPY's first support would be the psychological level of 142.50. Once surpassed, the next stop would be the 142.00 mark, followed by today’s low of 141.77. Once those two levels are cleared, the drop could extend toward the August 5 low of 141.69.

On the other hand, the first resistance would be the August 26 daily low of 143.44. A breach of the latter would expose key resistance levels. First, the Tenkan-Sen will be at 144.49, followed by the Senkou Span A at 145.00. Up next would be the Kijun-Sen at 145.73.

USD/JPY Price Action – Daily Chart

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.

The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
AUDUSD Long-term Forecast: Bulls to Get Energy from RBAThe Australian Dollar has been through a upward trend since 2022. Will it continue its upward trend in the long-term?
Author  Mitrade
Mar 13, 2023
The Australian Dollar has been through a upward trend since 2022. Will it continue its upward trend in the long-term?
placeholder
Copper Long-term forecast: Will Copper Price Expected To Soar In 2023?The price of copper is affected by various of factors. You may wonder how the price of cooper will be in 2023, check out our forecast analysis.
Author  Mitrade
Mar 13, 2023
The price of copper is affected by various of factors. You may wonder how the price of cooper will be in 2023, check out our forecast analysis.
placeholder
What is SEI? Why did Binance, Coinbase, and OKX all list SEI coin simultaneously?Sei is a new Layer-1 public chain, and the launch of its token SEI can create new opportunities.
Author  Mitrade
Aug 16, 2023
Sei is a new Layer-1 public chain, and the launch of its token SEI can create new opportunities.
placeholder
Understanding the first crypto market crash of 2024 and what to expect nextThe 365-day MVRV ratio suggests that this crash may be just the beginning. If the ETF is rejected before the second quarter of 2024, it could trigger a sharp correction.
Author  FXStreet
Jan 04, Thu
The 365-day MVRV ratio suggests that this crash may be just the beginning. If the ETF is rejected before the second quarter of 2024, it could trigger a sharp correction.
placeholder
Natural Gas sinks to pivotal level as China’s demand slumpsNatural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
Author  FXStreet
Jul 01, Mon
Natural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
Related Instrument
goTop
quote