ended Tuesday at 162.27, keeping the Japanese yen near its 40-year lows. Pressure on the currency persists as Japanese authorities have yet to carry out new interventions to support the exchange rate.
The yen fell sharply on Monday following Reuters reports that Japanese authorities do not plan to change the state pension fund's asset structure in the near future, reducing expectations of additional support for the domestic financial market.
Subsequently, Finance Minister Satsuki Katayama said the country's largest pension fund could adjust its investment structure if necessary. He also proposed including government bonds in a tax-free investment program for private investors to increase interest in domestic assets.
Additional pressure on the yen came from the strengthening of the US dollar and a further rise in oil prices. The catalyst was US President Donald Trump's decision to reestablish the blockade on Iranian ships passing through the Strait of Hormuz, along with his call for countries that benefit from the security of this strategic route to compensate Washington for its protection costs.
Technical analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 162.22 level, which currently extends to 162.46. Today, a decline to the level of 162.22 is expected (test from above), followed by further growth to 163.30, with the prospect of the trend continuing to 164.15. Technically, this scenario is confirmed by the MACD indicator, the signal line of which is located above the zero level and points strictly upward.
On the H1 chart, USD/JPY has completed a descending wave pattern to the 162.22 level. An extension of the wave to 162.00 cannot be ruled out. From then on, the start of a wave of growth is expected until at least 163.30. A break above this level would open possibilities for a continuation of the growth wave to 164.15. Technically, this scenario is confirmed by the stochastic oscillator, whose signal line is below the 50 level and points strictly down to 20, indicating short-term bearish pressure before a possible reversal.
Conclusion
USD/JPY remains elevated, with the yen stuck near 40-year lows as markets await concrete action from Japanese authorities. The currency weakened further following reports that the state pension fund will not change its asset structure imminently, although Finance Minister Katayama later left the door open for adjustments. Meanwhile, renewed US naval blockades in the Strait of Hormuz and Trump's demand for compensation from his allies have driven up oil prices, contributing to the strength of the dollar. Technical indicators suggest the pair could see a modest pullback before resuming its upward trajectory towards 163.30 and possibly 164.15, with intervention risks remaining the key wild card for yen bulls.
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.
