The Japanese yen rose slightly against the US dollar on Monday, holding near 156.73.
Investors have already weighed in on previous comments from Bank of Japan (BoJ) officials. Bank of Japan Governor Kazuo Ueda emphasized the need to anchor inflation expectations before reviewing interest rate decisions, highlighting the challenge of accurately determining the level of interest rates needed.
Bank of Japan Deputy Governor Shinichi Uchida said the final battle against deflation is near and predicted continued wage growth.
Last week, the yen came under pressure from statistics, which reflected a slowdown in Japan's core inflation to 2.2% in April from 2.6% in March, with food inflation contributing significantly to the decline. Headline inflation fell to 2.5% in April from 2.7% in March, marking the second consecutive month of decline. Given the BoJ's efforts to reduce price pressure, these figures are worrying.
Overseas, the yen saw further pressure due to strong US economic data and the hawkish tone of the Federal Reserve minutes.
USD/JPY technical analysis
According to the H4 chart, USD/JPY has completed a correction wave towards 157.18 and is now forming a consolidation range below this level. A break to the upside could extend the structure to 157.51. Conversely, a break lower could start a new wave of decline towards 153.20, potentially extending to 149.00. Technically, this scenario is supported by the MACD indicator, whose signal line is above zero and points strictly downwards.
On the H1 chart, USD/JPY has completed a wave of growth towards 157.18, followed by a downward momentum to 156.84. A narrow consolidation range has now formed around this level. A break down from this range could lead to a continuation of the decline to 156.50, with a subsequent correction to 156.84 (test from below). A further decline to 155.90 is possible. This scenario is technically confirmed by the stochastic oscillator, with its signal line below 50 and ready to fall to 20.
Summary
The slight rise in the Japanese yen against the US dollar is influenced by comments from Bank of Japan officials and recent economic data. Technical indicators suggest the potential for both bullish and bearish moves, with important support and resistance levels to watch. Investors should closely monitor these levels and market conditions.
Disclaimer
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
