fell to 161.67 on Friday, and the yen fully recovered from its losses from the beginning of the week. Market participants are once again raising expectations of possible intervention by Japanese authorities, following the national currency's recent move to near 40-year lows.
Investors are also awaiting the release of official intervention data later this month to determine whether the Bank of Japan's actions were behind the yen's strong – albeit brief – gains in recent weeks.
New macroeconomic data has attracted additional attention. Japan's producer prices rose 7.1% year-on-year in June, marking the fastest pace since March 2023. Cost pressures remain elevated due to the Middle East conflict and a significant weakening of the yen.
At the same time, the Japanese currency found support in lower oil prices following reports that the United States and Iran intend to continue peace negotiations despite the recent escalation. Falling oil prices led to a drop in both the US dollar and US Treasury yields, while easing concerns about rising import costs for Japan, which remains one of the largest buyers of Middle East oil.
Technical analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 161.57 level, which currently extends to 162.62. A drop towards 161.30 is expected today, followed by a rebound to 162.62, with room for the trend to extend to 164.15. The MACD indicator supports this scenario, with its signal line above zero and pointing firmly upwards, reflecting continued bullish momentum.
Based on the H1 chart, the market has completed a bearish move to 161.20, with a possible extension to 161.16. An upward move towards 162.62 is expected. A break above this level would open the way for a continuation towards 164.15. The stochastic oscillator confirms this scenario, with its signal line above 20 and pointing towards 80, indicating growing bullish momentum in the short term.
Conclusion
The yen has fully recovered from its losses from the start of the week, supported by renewed expectations of possible Japanese intervention and lower oil prices following signs of peace negotiations between the United States and Iran. Producer prices in Japan rose at their fastest pace since March 2023, reflecting persistent cost pressures from the Middle East conflict and currency weakness.
However, falling oil prices eased concerns about the costs of Japan's energy imports and contributed to a decline in the dollar and Treasury yields. Technically, USD/JPY may see further declines towards 161.30 in the near term, but the broader uptrend remains intact, with potential for a rally towards 162.62 and beyond. Market attention now turns to official intervention data to confirm the central bank's recent activity.
By RoboForex Analysis Department
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.
