USD/JPY Price Analysis: Drops to a two-week low, at around 153.00

USD/JPY falls over 0.70% amid suspected BoJ intervention boosting Yen; pair shows short-term bearish momentum
Sellers target below 153.00, with supports at 152.00 and 50-DMA at 151.87.
Recovery above 153.00 could challenge resistances at 154.00, 156.28, with upside towards 157.00 and 157.98.

The Japanese Yen (JPY) extended its gains versus the US Dollar (USD) amid a suspected intervention by the Bank of Japan (BoJ) that happened late on Wednesday during the North American session. Although traders paired some losses and pushed the USD/JPY toward the day’s high at 156.28, renewed selling pressure in the major tumbled the pair to a two-week low. The USD/JPY trades at 153.19, down more than 0.70%.

USD/JPY Price Analysis: Technical outlook

The pair remains upward biased despite registering more than 3% weekly losses, as the USD/JPY price action stands above the Ichimoku Cloud (Kumo). In the short term, buyers seem to have lost momentum, as shown by the Relative Strength Index (RSI), which plunged below the 50 mid-line to the bearish territory. That could pave the way for further losses.

If sellers push the exchange rate below 153.00, further downside is seen as the pair could test the 152.00 psychological level. A breach of the latter will expose the 50-day moving average (DMA) to 151.87, followed by the next support level, which is seen at 150.81, the April 5 daily low.

Conversely, if buyers hold prices above 153.00, they could remain hopeful of higher prices but would face strong resistance areas. The first one would be the 154.00 figure, followed by the May 2 high at 156.28. Up next would be 157.00, followed by a May 1 high at 157.98.

USD/JPY Price Action – Daily Chart

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

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