USD/JPY Price Forecast: Post Bond Auction & Leading Indicators Firm; Buy Now
During the early Asian trading hours, the USD/JPY pair showcased a bearish trend but found support around the 147.730 level. This comes as market participants assess recent economic indicators from Japan, including the 30-year bond auction posting at 1.79|3.2, a slight increase from the previous 1.63|3.0, and leading indicators marginally surpassing expectations at 110.0% against a forecast of 109.4%.
US Dollar Strength Amid Fed Chair’s Remarks
The US dollar’s resilience is notable, as Federal Reserve Chair Jerome Powell indicates reluctance towards aggressive rate cuts. While easing the policy is on the horizon with the anticipation of three rate reductions by 2024, Powell cautions that acting prematurely could risk the Fed’s progress on economic stabilization.
Economic Data and Rate Speculations
Powell’s comments precede the impressive January US Nonfarm Payrolls report, which added a substantial number of jobs, propelling US Treasury yields and, consequently, significantly strengthening the USD/JPY pair.
The positive momentum is further supported by strong ISM Manufacturing and Services PMIs, which bolster the outlook for the US economy and underpin the dollar’s demand.
Japan’s Monetary Policy and Geopolitical Influences
Contrary to the US’s position, Japan maintains an ultra-accommodative monetary policy stance, in line with the Bank of Japan’s hints to conclude its negative interest rate cycle. However, geopolitical tensions and market volatility continue to underscore the potential for the Japanese yen as a safe-haven asset.
USD/JPY Price Forecast: Technical Outlook
In the latest market update, USD/JPY is navigating modest fluctuations, showing a slight uptick at $147.972. The currency pair, however, confronts a series of resistance levels that may curb its ascent.
Stronger barriers are then present at $150.338 and $151.256, following the immediate resistance at $148.783. These thresholds will test the pair’s ability to maintain its bullish momentum.
In contrast, the green line at $147.747 represents the pivot point, which anchors the pair’s current trajectory. Should bearish pressure intensify, immediate support at $147.106 could offer a reprieve, with subsequent cushions at $146.243 and $145.285 potentially halting further declines.
Technical indicators, including the Relative Strength Index (RSI), hovering around 50, signal a neutral market sentiment, neither overbought nor oversold. The 50-day Exponential Moving Average (EMA) sits at $147.747, aligning closely with the pivot point, suggesting a critical juncture for future price action.
USD/JPY’s recent chart patterns, including a Doji candlestick formation near the support level of $147.729, hint at indecision. However, the potential development of a morning star candlestick pattern could indicate an impending upward movement.
In summary, the USD/JPY pair presents a cautiously optimistic outlook, with the potential to initiate a buying trend above the $147.729 level as traders anticipate a test of the upper resistance in the coming days.
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