All eyes are on USDJPY, as the currency pair exceeded the psychological resistance level of 160.00, sparking more rumors of a Bank of Japan intervention. Analysts speculate that an intervention is only possible after the release of the Personal Consumption Expenditures later today, which is the Federal Reserve's primary inflation measure.
Overview
All eyes are on USDJPY, as the currency pair exceeded the psychological resistance level of 160.00, sparking more rumors of a Bank of Japan intervention. Analysts speculate that an intervention is only possible after the release of the Personal Consumption Expenditures later today, which is the Federal Reserve's primary inflation measure.
High Impact Economic Events
Friday 12:30 pm (GMT+0): GDP m/m (CAD)
Friday 12:30 pm (GMT+0): Core PCE Price Index m/m (USD)
Sunday 01:30 am (GMT+0): Manufacturing PMI (CNY)
Sunday 01:30 am (GMT+0): Non-Manufacturing PMI (CNY)
Sunday All Day: French Presidential Election (EUR)
Technical Analysis
The USDJPY has been rising since December 28 of last year, when it reached the support level of 140.249. Subsequently, the exchange rate formed a trough at 143.417, higher than the previous one, and then went on to surpass the peak at 145.979, indicating a bullish reversal, known in technical analysis as a failure swing. A USDJPY rally of higher peaks and troughs followed to mark the highest exchange rate, 161.282, in 2024. Both the 50-period Exponential Moving Average (EMA) and the Momentum oscillator support the bullish bias for the currency pair. In particular, prices are above the EMA, while the Momentum oscillator registers values above the 100 baseline. A closer look reveals a negative divergence between the price and the Momentum oscillator, which serves as a warning for a potential correction.
Potential Upside Targets
If the bulls manage to maintain control of the USDJPY market, traders may consider the following three potential upside targets:
162.831: The initial upside target is estimated at 162.831, representing the 261.8 percent Fibonacci extension drawn from the peak at 157.707 down to its corresponding trough at 154.540.
164.969: The second price objective is seen at 164.969, aligning with the 423.6 percent Fibonacci Extension drawn from the swing high at 150.844 and the swing low at 146.479.
167.955: The third price objective is calculated at 167.955, which corresponds to the 423.6 percent Fibonacci extension drawn from 157.707 down to 154.540.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following four downside targets:
158.931 The initial support level is identified at 158.931, representing the weekly Pivot Point calculated using the standard method.
157.707 The second potential downside target is estimated at 157.707, which represents the peak marked on May 29.
156.120: The third price objective is 156.120, aligning with the 23.6 percent Fibonacci Retracement drawn from the support level of 140.249 up to the year's high at 161.282.
153.110: An additional support level is determined at 153.110, representing the 38.2 percent Fibonacci Retracement of the rally.
Conclusion
As the USDJPY pair surges, rumors of an impending intervention by the Bank of Japan grow, especially after the release of the upcoming US inflationary data on Personal Consumption Expenditures later today. It is essential for traders to remain up-to-date on the latest geopolitical and economic developments, trade wisely, and closely monitor market trends to optimize potential investment returns and mitigate probable risks and losses.