continues its upward trajectory on Wednesday, rising to 158.78 after a volatile start to the week. Pressure on the yen has eased amid a decline in oil prices and expectations of a possible resolution of the Middle East conflict, a development of particular importance for Japan's energy-importing economy.
The move comes amid reports of US diplomatic efforts aimed at resolving the conflict with Iran. However, skepticism persists in the market, as Tehran had previously denied the existence of negotiations with Washington.
Additional support for the yen comes from expectations of possible government intervention. Japanese officials have expressed their willingness to take necessary steps to stabilize the currency.
It has also been reported that Japan's Ministry of Finance is in contact with market participants about possible intervention in the oil futures market, given its impact on the yen.
Technical analysis
On the H4 chart, USD/JPY is forming a consolidation range around the 158.60 level. Today a drop to 157.40 is expected, followed by a rise to 158.50. If the market exceeds this range, it would be relevant to consider a correction towards 160.10. Subsequently, new bearish momentum is anticipated to 157.40, with the potential for the correction to extend to 156.00.
Technically, this scenario is confirmed by the MACD indicator: its signal line is below zero and points strictly downwards, reflecting the potential for a continued correction.
According to the H1 chart, the market is forming a descending wave pattern towards 157.40. Today we will consider reaching this target level. After the completion of this wave, the next wave of growth is expected to develop to 160.10 (test from below).
The scenario is confirmed by the stochastic oscillator: its signal line is below the level 50 and points strictly downwards, towards 20, indicating that the short-term bearish potential persists.
Conclusion
USD/JPY remains in a growth-oriented mood as falling oil prices and tentative hopes for diplomatic progress in the Middle East offer some relief to the yen. While reports of US-led negotiations with Iran have contributed to a pullback in energy markets, market skepticism persists given Tehran's previous refusal to engage in talks. Japanese authorities are ready to intervene should volatility increase, adding an element of caution for traders. Technical indicators point to a short-term downward correction before the broader uptrend potentially resumes towards 160.10. The yen's trajectory remains closely linked to developments in energy markets and geopolitical tensions, which continue to shape the Bank of Japan's policy landscape.
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.
