- USD/JPY faces pressure in an attempt to recapture 160.00 as fears of Japan’s intervention deepen.
- The BoJ looks to raise interest rates further as weak Yen continues to boost inflationary pressures.
- The US Dollar will be guided by the US core PCE inflation data for May.
The USD/JPY pair exhibits a subdued performance slightly below the psychological resistance of 160.00 in Tuesday’s European session. The rally in the asset appears to have stalled as investors expect a stealth intervention by Japan’s authority against excessive FX moves to limit the downside in the Japanese Yen.
Fears of Japan’s intervention in the FX domain intensified after country’s main currency diplomat Masato Kanda said on Monday that the government would intervene around the clock if necessary.
Also, expectations for the Bank of Japan (BoJ) to tighten policy further have improved as weak Yen is resulting in higher inflation by making exports competitive in global markets and increasing import costs. The BoJ minutes for the latest meeting showed that one member advocated for an increase "without too much delay" to help bring inflation back down, Reuters reported.
Meanwhile, the US Dollar (USD) struggles to gain ground as investors expect that the Federal Reserve (Fed) will deliver two rate cuts this year and will choose the September meeting to begin the policy-normalization process. This week, the major trigger for the US Dollar will be the United States (US) core Personal Consumption Expenditure price index (PCE) for May, which will be published on Friday.
USD/JPY hovers near the horizontal resistance of the Ascending Triangle chart formation on a daily timeframe, which is plotted from April 29 high of 160.32. The upward-sloping border of the above-mentioned chart pattern is placed from March 11 low near 146.50.
Advancing 20- and 50-day Exponential Moving Averages (EMAs) near 157.70 and 156.10, respectively, indicate that the overall trend is bullish.
The 14-day Relative Strength Index (RSI) oscillates inside the 60.00-80.00 range, suggesting that momentum is already in favor of bulls.
More upside would appear if the asset breaks above multi-year high of 160.00. Breach of the latter will expose the pair in unchartered territory towards 162.00
On the flip side, a breakdown below May 16 low at 153.60 will expose the asst towards May 3 low at 151.86, followed by the psychological support of 150.00.
USD/JPY daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0400 in quiet trading
EUR/USD trades in positive territory above 1.0400 in the American session on Friday. The absence of fundamental drivers and thin trading conditions on the holiday-shortened week make it difficult for the pair to gather directional momentum.
GBP/USD recovers above 1.2550 following earlier decline
GBP/USD regains its traction and trades above 1.2550 after declining toward 1.2500 earlier in the day. Nevertheless, the cautious market mood limits the pair's upside as trading volumes remain low following the Christmas break.
Gold declines below $2,620, erases weekly gains
Gold edges lower in the second half of the day and trades below $2,620, looking to end the week marginally lower. Although the cautious market mood helps XAU/USD hold its ground, growing expectations for a less-dovish Fed policy outlook caps the pair's upside.
Bitcoin misses Santa rally even as on-chain metrics show signs of price recovery
Bitcoin (BTC) price hovers around $97,000 on Friday, erasing most of the gains from earlier this week, as the largest cryptocurrency missed the so-called Santa Claus rally, the increase in prices prior to and immediately following Christmas Day.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.