Key Points:
- USD/JPY uptrend, with technicals suggesting resistance at 152.00 and supports at 151.30 and 151.00.
- USD gains on positive US jobs data; JPY weakens with real wages falling for 23 months.
- BoJ’s dovish stance and bullish equity markets pressure JPY.
- US-Japan interest rate gap expected to widen.
The recent dynamics of the USD/JPY currency pair have attracted considerable attention from investors and market analysts alike. The Japanese Yen experienced a significant downturn from a two-week high against the USD, prompted by economic developments. Notably, the release of positive US monthly jobs data last Friday has introduced a bullish sentiment towards the USD.
However, the domestic front in Japan painted a less rosy picture, with real wages falling for the 23rd consecutive month, as reported on Monday. Anticipation around the Nonfarm Payrolls (NFP) report further compounded this series of events, suggesting a potential delay in Federal Reserve rate cuts and thus affecting expectations for 2024.
Dovish BoJ vs. Bullish US Markets: JPY’s Struggle
Several key factors have been instrumental in shaping the direction of the USD/JPY pair. The Bank of Japan’s (BoJ) dovish stance hints at a delayed rate hike, putting pressure on the JPY. Moreover, a positive risk tone and bullish equity markets have further undermined demand for the Yen. The upbeat US jobs data and elevated US Treasury bond yields have bolstered the USD, while Japanese authorities remain vigilant, ready to intervene to support their currency. Market expectations of a widening gap between US and Japanese interest rates also play a critical role.
USD/JPY Uptrend: Technicals Point to 152.00 Threshold
The USD/JPY pair has been on an uptrend over the past month, buoyed from its March trough. Technical analysis reveals bullish thresholds around the 152.00 mark, with immediate support levels identified at 151.30 and 151.00. Conversely, bearish thresholds are set at various levels down to 149.00, indicating potential pivot points for the currency pair. Oscillators stay positive, suggesting that the trend is not overbought and might continue its upward trajectory.
Optimistic USD/JPY: Watching the 152.00 Resistance
Market analysts suggest that the USD/JPY pair will likely trend upwards, emphasizing the prevailing bullish sentiment surrounding it. Investors and traders should monitor sustained strength above the 152.00 mark before placing fresh bets. This strategy indicates a cautious but optimistic outlook for the USD against the JPY.
