- USD/JPY falls from 150.91 to 147.28 following weak non-farm payroll data.
- The pair dips below both the 200-day and 20-day SMA, with a bearish RSI.
- Key support is seen at 145.71, where the 50 and 100-day SMAs intersect.
USD/JPY is set to close the week down by 0.18%. This drop follows an employment report in the US that exceeded expectations, driving demand for the Japanese yen as a safe haven. Additionally, declining US Treasury yields contributed to a decrease from 150.91 to 147.28. Currently, the pair is trading at around 147.38, close to the week’s low.
USD/JPY Price Forecast: Technical Outlook
After the release of the data, USD/JPY reversed its course, falling to 149.49 below the 200-day SMA. It tested a daily low of 148.58 on July 31, but this level was quickly breached as sellers pushed it toward a 20-day SMA around 147.69, eventually breaking below 147.50.
As the trading day came to a close, the pair stabilized below this level. The momentum appeared to weaken slightly, as indicated by the relative strength index (RSI).
If USD/JPY drops below 147.00, the next support level is at a swing low from July 24 at 145.85, followed by the convergence of the 100-day and 50-day SMAs at 145.71. A breach of this could lead to a further decline toward the 144.00 mark.
USD/JPY Price Chart – Daily
Japanese Yen Questions
The Japanese Yen (JPY) is among the most actively traded currencies. Its value largely hinges on the state of the Japanese economy, particularly influenced by the Bank of Japan’s policies, differences in bond yields between Japan and the US, and trader sentiment, among other factors.
Currency control is one of the Bank of Japan’s mandates, which makes market movement crucial for the yen. Although the bank has intervened directly to lower the yen’s value, it does so with caution due to potential political ramifications with major trading partners. The extended period of ultra-loose monetary policy from 2013 to 2024 has widened policy differences between the Bank of Japan and other central banks, leading to yen depreciation against other major currencies. Lately, some support for the yen has emerged as this policy gradually shifts.
For the past decade, the Bank of Japan’s commitment to an ultra-loose monetary stance has created notable policy differences with other central banks, especially the US Federal Reserve. This has widened the gap between US and Japanese bond yields since 2010, affecting the dollar’s value against the yen. The BOJ’s anticipated decisions in 2024, combined with interest cuts from other major central banks, may help narrow this gap.
The Japanese yen is often viewed as a safe investment. During times of market uncertainty, investors tend to favor it for its reliability and stability, which can lead to its value increasing against riskier currencies.
