remains near 161.84 on Tuesday, with the yen near its 40-year lows. Pressure on the Japanese currency continues as market participants continue to bet against it, with no visible monetary interventions from Japanese authorities having materialized.
At the same time, investors are closely monitoring potential Tokyo moves. Japanese Finance Minister Satsuki Katayama reiterated that the authorities are willing to enter the currency market if necessary. He also noted that Tokyo and Washington maintain close consultations on monetary policy issues. However, the market remains skeptical that interventions alone – without a change in monetary policy – can provide lasting support to the yen.
Additional pressure on the Japanese currency comes from expectations of further expansion in budget spending and the Bank of Japan's slow pace of policy normalization.
The economic data released was mixed. Nominal wages rose 3.2% year-on-year in May, but household spending fell 0.4%, pointing to continued weakness in domestic demand.
Technical analysis
On the H4 chart, USD/JPY is trading within a consolidation range around 161.92 and after a break lower, moves lower towards 161.44. This level is expected to be reached today, followed by a bounce towards 162.55. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.
On the H1 chart, the pair is forming a compact consolidation range around 161.92. A break down towards 161.44 is expected, followed by a possible rise to 162.50. The stochastic oscillator confirms this scenario, with its signal line below 50 and pointing towards 20, indicating that short-term bearish pressure persists.
Conclusion
The yen remains under pressure, trading near 40-year lows as markets continue to bet against the currency in the absence of any real intervention from Japanese authorities. While Finance Minister Katayama has reiterated his willingness to act and confirmed close coordination with Washington, market participants remain doubtful that intervention alone can reverse the trajectory of the yen without changes in monetary policy.
Mixed domestic data (rising nominal wages but falling household spending) highlights the current weakness in demand. Technically, USD/JPY may see a modest pullback towards 161.44 in the near term. However, the overall outlook for the yen remains negative, with further fiscal spending expansion and the Bank of Japan's gradual approach likely to keep the currency under pressure.
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.
