The pair hovers around 155.00 on Monday, having previously reached a new 34-year high of 160.00. Market rumors suggest that Japanese authorities may have intervened in the currency market, although there has been no official confirmation. Today's market move is particularly notable due to a holiday in Japan, which has resulted in minimal liquidity in the market. This scenario made it relatively easy for investors to cause significant changes in quotes.
Last week, the Bank of Japan (BoJ) maintained its core monetary policy, keeping the interest rate stable between 0 and 0.1% annually. Market participants were disappointed as they had anticipated a more pronounced reaction from the Bank of Japan.
The main factor behind the current weakness of the yen is the significant discrepancy between the interest rates set by the Bank of Japan and the US Federal Reserve. This gap in interest rates puts substantial pressure on the yen, making any real intervention largely ineffective. The BoJ, aware of this reality, has so far limited its actions to verbal interventions to influence the value of the yen.
USD/JPY technical analysis
A growth wave was observed on the USD/JPY H4 chart that reached the level of 160.16. The structure of the first downward impulse to 154.70 is currently forming. Once this level is reached, a correction to 157.35 (testing from below) is anticipated, potentially followed by a new wave of decline towards 152.32, with the prospect of continuing the trend to 149.65. This scenario is technically supported by the MACD oscillator, which is above zero at highs but is expected to drop to new lows.
On the first half chart, the upward growth wave to 160.16 has completed. Now we are observing the formation of the first impulse of the descending wave. The local target of this bearish momentum at 155.15 has been achieved. We anticipate a corrective move to 157.35 (testing from below). Subsequently, the next phase of the downtrend is expected until 154.65, which is the main objective. After completing this, a correction back to 157.35 can be considered. The stochastic oscillator confirms this bearish outlook, with its signal line below 50 and pointing strictly downwards.
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.
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