Yen in Focus: Japanese Yen hit predicted levels – What next?

The yen fell near a three-month low against the dollar as persistent U.S. inflation increased the need for longer-term higher interest rates amid Japan’s economic slowdown and market doubts about a short-term exit from its easy policy.

In Asia, the PBOC cut the five-year LPR, which is used to set mortgages, to 3.95 percent from 4.10 percent, while the one-year LPR remained unchanged at 3.45 percent.

Today’s change was somewhat unexpected, as the central bank kept medium-term interest rates unchanged over the weekend. However, the continuously weakening economic situation in China has led some investors to accept a greater relaxation of the country’s monetary policy.

Ahead of the result, the foreign yuan, which has already broken the psychological $150 level for six straight sessions and received warnings from Japanese authorities to stabilize the currency.

On the other hand, Japan’s economy, which unexpectedly slipped into a recession in the final quarter of last year on sluggish consumption and capital expenditure, has prompted investors to rethink the chances of a near-term exit by the Bank of Japan (BOJ) from its ultra-loose monetary policy.

In the broader market, the dollar edged higher, though moves were largely subdued due to Monday’s holiday in the United States for Presidents’ Day

Further, The FOMC Minutes on Wednesday might offer some hints about further monetary policy, given recent signs of stubborn inflationary pressures. Moving on, Japan’s Trade Balance will be due on Wednesday ahead of the FOMC Meeting Minutes. Both will have a strong impact on the Currency.

Technical Outlook – Japanese Yen

The USDJPY pair continued to rise since start of the 2024. The pair rebounded from a low of 140.2490 and made a high of 150.884 last week, posted an increase of almost 6.5%.

Yesterday, prices touched a three-month high 150.3680 and traded at 150.108, on a closing basis.

As per the view given on 19 January 2024, USDJPY pair reached our predicted levels 149.850-150.50.

In the chart above, the rally that started on January 16, 2023 was seen as an impulse wave 1-5 that ended at the November 2023 high of 151,908. Now the pair has turned to in a corrective wave ABC.

Furthermore, the formation of three white candlesticks also offers a bullish view. RSI 14 and its 9 SMA gives a positive crossover.

Currently, the pair is trading near to massive resistance 150.9550. A break above will add gains and pair could reach towards 151.25-151.5525 very soon.

All the technical factors mentioned above point to an uptrend. Therefore, the short-term trend is still positive with USDJPY rising 151.25-155.25. On the downside, there is major support at 148.7525, below which the pair could pull back to 146.25-145 again

Commodity Samachar
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