- Traders are cautiously seeking hints about a potential yen intervention.
- The substantial gap in interest rates between Japan and the United States has led to yen weakness.
- The yen has lost nearly 10% of its value against the dollar this year.
Today’s USD/JPY forecast is bullish. On Monday, the yen declined to its lowest point this year against the dollar, breaching the crucial 145 threshold. However, it recovered slightly as traders cautiously sought hints about potential intervention. Meanwhile, the dollar surged to its highest level in over a month.
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The Japanese yen weakened, reaching as low as 145.22 per dollar, its lowest since November 10. However, the currency swiftly changed direction in a volatile start to the week. The yen has become an attractive target for short-sellers and funding trades due to Japan’s low yields. Moreover, the substantial gap in interest rates between Japan and the United States has led to ongoing weakness in the yen.
Notably, Japan took action in the currency markets when the USD/JPY price exceeded 145 last September. This move prompted the Ministry of Finance (MOF) to purchase yen, driving the pair back to around 140 yen. Throughout the year, the yen has lost nearly 10% of its value against the dollar.
Charu Chanana from Saxo Markets noted, “The absence of verbal intervention so far implies that Japanese authorities might be more patient. This follows recent adjustments to monetary policy and disinflation trends in the United States.”
She added, “Nevertheless, traders may approach the 145 level cautiously, and profit-taking could occur, indicating that surpassing 145 will likely be a gradual process.”
USD/JPY key events today
Investors are not expecting any key events from Japan or the US today. Therefore, the pair will likely experience thin trading.
USD/JPY technical forecast: Price wobbling under 145.01.
USD/JPY is hovering near the 145.01 resistance level on the charts. Bulls have been in the lead, pushing the price above the 142.02 resistance level. The bullish bias is strong as the price has stayed far above the 30-SMA, and the RSI trades near the overbought region.
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The bullish move has, however, paused at 145.01. This might lead to a pullback to retest the recently breached 142.02 level and the 30-SMA. Bulls will then resume the uptrend if this support zone holds firm.
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Saqib Iqbal
