- USD/JPY ended unchanged at 143.58, forming a “doji” candlestick, indicating indecision amid geopolitical risks.
- The RSI suggests a possible consolidation and is expected to trade between 142.98 and 144.53 in the near term.
- A move above 144.53 could target the 50-DMA at 145.00 and 145.47, while a move below 142.98 reveals the support level at 141.65.
On Tuesday, USD/JPY formed a “tie” and ended the day unchanged at around 143.58. During the session, the major stocks remained within a range of around 150 pips and ended the trading day with a minimal gain of 0.02%.
USD/JPY Price Prediction: Technical Outlook
The downtrend remains intact. Risk aversion caused USD/JPY to rebound amid Iran's attack on Israel, even though USD/JPY was on course for continued losses. This has supported the appreciation towards the current exchange rate.
The Relative Strength Index (RSI) has a flat slope but favors further downside. This suggests future consolidation. That said, USD/JPY may trade within the 142.98-144.53 range in the short term.
If buyers clear the top of the range, 145.00 will be exposed, followed by the 50-day moving average (DMA) of 145.47. A breakout of the latter will expose the bottom of Kumo around 147.80-148.00.
Conversely, if USD/JPY falls below 142.98, the September 30th cycle low of 141.65 will be exposed. In case of further decline, the next stop would be the September 16th pivot low of 139.58.
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.
