USDJPY Below 150, Down 15 Cents in A Month

USDJPY turned really bearish in July and after the 200 pip dive today after the soft NFP, the Yen has fallen below 150, slipping below 147.

Written by: Skerdian Meta • Saturday, August 3, 2024 • 2 min read

• Last updated: Friday, August 2, 2024

USDJPY turned really bearish in July and after the 200 pip dive today after the soft NFP, the Yen has fallen below 150, slipping below the 147 level. The Bank of Japan raised interest rates yesterday, while expectations for the FED lowering rates keep going up, with anticipations of a 50 bps cut by September.

USD/JPY Chart Daily – Will the 20 SMA Hold at 146?

The Japanese yen has significantly appreciated against all major currencies. This strength is partly attributed to the Bank of Japan’s (BOJ) intervention and the breaking of a key trendline in the USD/JPY pair. However, the yen’s rise lacks strong fundamental support. This week, there has been some positioning for a potential rate hike by the BOJ, adding further bearish pressure on the pair. The unimpressive US economic data and the USD’s performance are also contributing to the yen’s current decline, despite its safe haven status.

After being bullish since 2021 and gaining 60 cents, the USD/JPY reversed course last month. In just one month, 25% of those gains have been erased, with the pair dropping 15 cents and the decline accelerating this week. On the lower timeframe charts, moving averages have been providing some support, but they are now being broken one after another.

Reassessment of the FED Monetary Policy

The change coincides with a significant reassessment of US monetary policy levels amidst declining inflation and an improving economy. The US unemployment rate increased to 4.3% from 4.1%, though the rounded figure was nearly 4.25%. The participation rate also increased slightly, resulting in no overall change in the unemployment rate. Regarding the NFP data, 114K new jobs were created, falling short of the anticipated 175K. Government employment remained relatively steady at around 70K from the previous month, leading to a barely altered headline NFP total. Full-time employment showed a notable increase of +448K, while part-time payrolls saw a significant decline of -325K.

Impact on USD/JPY, Nikkei and Japanese Financial Markets

Following the release of the non-farm payrolls report, the USD/JPY pair dropped sharply from 149.00 to as low as 146.60. This decline erases a significant runup in the pair, which had created substantial anxiety for Japanese policymakers, marking its lowest point since March. The Nikkei 225 experienced its biggest decline since 1987, falling almost 6% and breaking below the major support zone, due to the pair’s unexpected turn of events. Additional losses in the USD/JPY could cause further harm. However, given the pair’s rapid and substantial decline, and its current oversold condition, selling at this point is not advisable. It’s crucial to closely monitor stock and bond markets.

USD/JPY Live Chart

USD/JPY

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.