- The USD/JPY exchange rate remained at 150.21, extending its rise for the second consecutive day on the back of rising US bond yields.
- The RSI is gaining bullish momentum, suggesting that the pair is approaching a key resistance level above the Ichimoku cloud (Kumo).
- The next resistance levels include the 100-DMA at 150.85 and the 200-DMA at 151.32, with support at 150.00 and 149.00.
USD/JPY is trading at 150.21, up over 0.38%, above 150.00, on strong US retail sales and employment data. The currency extended its gains for a second straight day as U.S. Treasury yields soared as investors lowered the likelihood of the Federal Reserve cutting interest rates by 25 basis points (bps) at its next meeting in November.
USD/JPY Price Prediction: Technical Outlook
The dollar/yen pair continues on an upward trajectory and is now testing the upper bound of the Ichimoku cloud. Technical indicators suggest that the major is trending up, but a clear break above the clouds is required for the trend to be confirmed.
The Relative Strength Index (RSI) has cleared its last three peaks, suggesting buyers are gaining momentum.
If USD/JPY resumes its bullish uptrend, buyers will face a 100-day moving average (DMA) of 150.85. Beyond this, the next stop is the confluence of the cloud tops and the 200-DMA at 151.32, extending the climb to 152.00.
Conversely, the first support for USD/JPY will be at 150.00. Above this, the next stop is 149.00 points, which would be above Tenkasen at 148.84 points. If these levels are adopted, the next support will be Senkou Span A at 14690 followed by 50-DMA at 145.50.
USD/JPY price movement – daily chart
Frequently asked questions about the Japanese Yen
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by trends in Japan's economy, but more specifically by factors such as the Bank of Japan's policies, the difference in Japanese and U.S. bond yields, and traders' risk sentiment.
One of the Bank of Japan's missions is exchange control, so its trends are key to the yen. The Bank of Japan occasionally intervenes directly in currency markets, generally to devalue the yen, but does not do so frequently due to political concerns in major trading partners. The Bank of Japan's ultra-easy policy from 2013 to 2024 widened the policy divergence between the Bank of Japan and other major central banks, causing the yen to weaken against major currencies. Recently, the gradual easing of this ultra-easy policy has provided some support to the yen.
Over the past decade, the Bank of Japan's commitment to ultra-easy monetary policy has widened its policy divergence from that of other central banks, particularly the US Federal Reserve. This confirmed the widening gap between US 10-year bonds and Japan's 10-year bonds, which favored the US dollar against the Japanese yen. The gap is narrowing with the Bank of Japan's decision to gradually abandon its ultra-easy policy in 2024, coupled with interest rate cuts by other major central banks.
The Japanese Yen is often considered a safe investment. This means that when markets are under stress, investors are more likely to put money into the Japanese currency, which is expected to be reliable and stable. Times of turmoil are likely to increase the value of the yen against other currencies that are considered riskier investments.
