The Japanese yen is seeing a notable decline against the US dollar, with the pair currently hovering around 151.88 on Tuesday. Despite the instability of the US dollar, driven mainly by fluctuations in Treasury yields, the yen faces significant downward pressure.
Market participants remain cautious, particularly as the USD/JPY pair approaches levels that had previously triggered currency interventions by Japanese authorities. Despite Japan's aggressive verbal measures aimed at strengthening the yen, these efforts have met with limited success. Finance Minister Shunichi Suzuki has reiterated Japan's commitment to addressing the excessive depreciation of the yen, echoing his previous statements about his willingness to intervene against further declines in its value.
However, the prospect of intervention, while a genuine threat, has so far prevented the yen from breaching the 152.00 mark.
This substantial interest rate differential between the US Federal Reserve and the Bank of Japan (BoJ) is a critical factor contributing to the weakness of the yen. While the BoJ has just abandoned its negative interest rate policy and set its interest rate again at zero, the Federal Reserve maintains a fund rate of 5.5% per year, with no cuts having been applied so far .
USD/JPY technical analysis
On the H4 chart, the USD/JPY pair completed a growth wave to 151.75 and corrected to the level of 150.80. Another wave of growth has been seen today to 151.75, and the market forms a consolidation range around this level. An upside break from this range could lead to a rise to 152.07. After reaching this level, a correction to 151.75 (test from above) may occur, followed by a rise to 152.70. This scenario is supported by the MACD oscillator, with its signal line above zero and about to reach new highs.
On the H1 chart, support at 151.75 has reinforced the development of a growth structure to 152.07. After reaching this target, a correction to 151.75 can be seen, which could lead to further growth towards 152.70, the main target of the growth wave. The stochastic oscillator confirms this analysis with its signal line above 50 and preparing to rise to 80.
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.
