USD/JPY Price Forecast: Bulls retake 200-day SMA amid recovery
- USD/JPY clears 200-day SMA as Dollar rebounds after intervention.
- RSI exits oversold territory, but bearish momentum still dominates.
- Close below 158.06 exposes 157.18 and 155.23 support.
The USD/JPY advances by some 0.41%, clearing the 200-day Simple Moving Average (SMA) at 158.06, as the Greenback recovers some ground following two days of intervention in the FX markets by US and Japanese authorities. At the time of writing, the pair trades at 158.39, after hitting a low of the day (LOD) of 157.56.
USD/JPY Price Forecast: Technical outlook
The overall trend remains downwards, despite the ongoing recovery that pushed the USD/JPY spot prices above the 200-day SMA. The Relative Strength Index (RSI) remains bearish, even though the index exited oversold territory near 20.
With that said, the path of least resistance favours further Yen strength, but a daily close above the 200-day SMA opens the door to challenge higher prices. In that scenario, the next resistance is the 159.00 mark, ahead of a test of the 100-day SMA at the 160.00 psychological level. If cleared, the next area of interest becomes the 50-day SMA at 161.21.
On the other hand, if USD/JPY ends Thursday’s session below the 200-day SMA, it opens the door for another leg down. The next support would be the August 4 daily low of 157.18, before plunging to challenge the August 3 swing low of 155.23. Beneath this area is the 155.00 figure, followed by the February 23 cycle low of 153.99.
USD/JPY Price Chart – Daily
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 BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, 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 supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
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.
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