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  • After going above the 129 level, USD/JPY took a sharp decline. 
  • Profit-taking, sales by Japan’s exporters, and the activity of the BOJ all impact the pair.
  • Fed and BOJ policies will be the key factor heading forward. 

The USD/JPY price during the London session faces a sharp decline after going above the 129.00 level. The USD retreated after a strong rally.

Down we go

Before losing traction, the USD/JPY price reached its highest level in over two decades at 129.00. However, the sudden drop occurred after substantial Japanese exporter bids at 129.50 were received.

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Furthermore, investors resorted to profit-taking as the yen recently plummeted against the US dollar. The major’s corrective decline was also spurred by assumed option obstacles near 129.50.

BoJ also weighs in

The BOJ’s bond market intervention is also responsible for the UD/JPY’s downhill trajectory.

Today, the Bank of Japan said it will conduct unrestricted fixed-rate purchases of 10-year Japanese Government Bonds (JGBs) at 0.25 percent from April 21 to 26.

Earlier in the Asian session, the central bank launched an unrestricted fixed-rate buy operation for JGBs for the first time this month, after the 10-year JGB reached the 0.25 percent maximum.

In an interview with Reuters, Japanese Deputy Chief Cabinet Secretary Seiji Kihara expressed a similar attitude to his colleagues, stating that the government will closely monitor the impact of a weaker yen on the economy.

Buy the dip?

On the other hand, the pair’s downside might be viewed as a favorable ‘buy the dip’ opportunity. The Fed-BOJ monetary policy divergence will continue to benefit US Treasury rates, hence the dollar versus the yen.

USD/JPY data events ahead

We have the typical weekly Mortgage Applications in the US docket, followed by Existing Home Sales and speeches by Fed M. Daly and C. Evans.

As for the JPY, we already saw the Balance of Trade and Tertiary Index in the Tokyo session.

What’s next to watch for USD/JPY price?

Investors and traders will look at the US data later today for fresh impetus.

USD/JPY price technical analysis: On a free fall

USD/JPY price

The USD/JPY is wobbling at the 127.80 level with a decrease of 0.80%. On the 4-hour chart, 20, 50, 100, and 200 SMAs are above the price. It signifies a broader bullish trend.

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The next key resistance is at 129.61. If the price goes above this level, we can see it further climbing towards the 130.29 level. Conversely, the next key support level for the pair is 127.61. Again, if the price goes above this level, it can dip towards 126.29.

The volume for the last three down bars is quite high but in the declining mode. It shows that the recent downside is corrective in nature.

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