USD/JPY Technical Analysis: Short-Term Uptrend Continues, But Bullish Momentum Lacks Conviction
The USD/JPY pair has seen positive traction for the second consecutive day, trading around mid-143.00s in the European session. Despite this, the bullish momentum appears weak as spot prices remain below the recent swing high. Traders are cautious ahead of the upcoming US inflation data release this week, keeping the market in a wait-and-see mode.
The downward revision of Japan’s second-quarter GDP has been weighing on the Japanese Yen, providing support for the USD/JPY pair amidst a modest US Dollar uptick. However, conflicting expectations regarding the Federal Reserve and Bank of Japan policies are limiting aggressive bullish moves and capping the pair’s upside potential.
Technically, a descending channel has been forming over the past few weeks, indicating a short-term downtrend. This suggests that selling pressure may increase at higher levels. Additionally, oscillators on the daily chart are signaling a negative outlook, further confirming the bearish bias.
For the USD/JPY pair to see further appreciation, a break above the 144.00 level is essential. A move beyond this key resistance could trigger a short-covering rally, pushing the pair towards the next hurdle near 144.55. Subsequent targets include the psychological level of 145.00 and the resistance zone around 145.60.
On the downside, immediate support lies at 143.20, followed by 143.00 and the Asian session low near 142.85. A breach of these levels could lead to a retest of the 142.00 round figure and potentially the seven-month low around 141.70-141.65 reached in August.
USD/JPY 4-hour chart
Japanese Yen FAQs
The Japanese Yen (JPY) is influenced by various factors such as the Bank of Japan’s policy, yield differentials between Japanese and US bonds, and market sentiment. The BoJ’s ultra-loose monetary policy and policy divergence with other central banks have contributed to the Yen’s depreciation against major currencies like the US Dollar.
Investors often view the Japanese Yen as a safe-haven asset, seeking its stability during market uncertainties. This perception can lead to a strengthening of the Yen’s value against riskier currencies in times of market stress.