Home USD/JPY Forecast: Yen Hits 7-Month Low as Trend Intensifies

USD/JPY Forecast: Yen Hits 7-Month Low as Trend Intensifies

  • The Japanese yen weakened beyond 143 yen against the dollar.
  • Monetary policy divergence between Japan and the US keeps growing.
  • Japan will consider all available options to respond to excessive currency movements.

Today’s USD/JPY forecast is bullish. The Japanese yen weakened beyond 143 yen against the dollar, reaching a seven-month low. There has been renewed selling pressure on the Japanese currency, often considered a safe-haven asset. Consequently, it poses a threat of increased import costs that could negatively impact consumers. 

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Notably, the divergence in monetary policies between the Bank of Japan and the US Federal Reserve is seen as a driving force behind the strengthening of the dollar. While Japan continues implementing easing measures, the Fed has adopted an aggressive tightening policy.

Elsewhere, Masato Kanda, Japan’s top currency diplomat, stated that Japan would consider all available options to appropriately respond to excessive currency movements. Furthermore, he intensified warnings against the yen’s recent rapid and one-sided weakening.

While speaking to reporters, the vice finance minister for international affairs emphasized the importance of currencies moving in a stable manner. Moreover, they should reflect their underlying fundamentals.

In October, Japan conducted a rare intervention by buying the yen to curb its weakening. The currency had reached a 32-year low of nearly 152 yen against the dollar. When asked about the possibility of currency intervention, Kanda said he would not disregard any options. 

Investors have been selling yen following the BOJ’s decision to maintain ultra-low interest rates on June 16. Furthermore, the BOJ committed to sustaining significant stimulus. in contrast, other central banks are tightening monetary policy to address rising inflation.

USD/JPY key events today

Investors will not get any key economic releases from Japan or the US today. Therefore, the pair will likely consolidate.

USD/JPY technical forecast: Bullish trend eyes the next resistance at 144.00.

USD/JPY technical forecast
USD/JPY 4-hour chart

On the 4-hour chart, USD/JPY is on a strong bullish trend, breaking above resistance levels and making new highs. The price has also stayed above the 30-SMA for a long time, respecting it as support. Additionally, the RSI has not gone below 50 in all that time, supporting bullish momentum. 

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With a strong bullish candle, the price broke above the 143.00 resistance and is currently retracing the move. However, bears have not shown any strength. This will likely allow bulls to retest and take out the 144.00 resistance.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.