USD/JPY in Focus: Yen Recovery and Trade Strategies Explained
The Japanese Yen is showing a lack of clear intraday direction, while USD/JPY remains in a consolidation phase above the 151.00 level
FUNDAMENTAL OVERVIEW:
- The Japanese Yen recovers from its lowest point in over a week against the USD on Tuesday.
- Concerns about the Bank of Japan’s capacity to raise interest rates may prevent JPY bulls from making new bets.
- Meanwhile, expectations of a less dovish Federal Reserve could provide support for the USD, benefiting USD/JPY.
The Japanese Yen (JPY) fluctuates between slight gains and minor losses against the US Dollar as it enters the European session on Tuesday, amid uncertain expectations regarding a potential interest rate hike by the Bank of Japan (BoJ) in December. In the short term, however, the JPY appears to have a slight edge, fueled by the BoJ’s more hawkish stance. The BoJ is expected to continue raising rates, contrasting with other major central banks, including the US Federal Reserve (Fed), which is anticipated to lower borrowing costs.
Furthermore, ongoing geopolitical tensions, a cautious market sentiment, and concerns over trade wars may continue to support the safe-haven appeal of the JPY. The Fed’s expected rate cuts are also limiting the rebound in US Treasury bond yields, offering additional support to the lower-yielding JPY. Alongside a subdued US Dollar, this dynamic creates headwinds for the USD/JPY pair. Traders are likely to hold off on making directional moves until the release of US consumer inflation data on Wednesday.
USD/JPY TECHNICAL ANALYSIS CHART:
Technical Overview:
USD/JPY is currently trading within a down channel.
USD/JPY is positioned above 10&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying zone, while the Stochastic oscillator suggests Positive trend.
Immediate Resistance level: 151.80
Immediate support level: 150.39
HOW TO TRADE USD/JPY
USD/JPY experienced a strong bullish rally, but it was halted by a resistance level. The subsequent bearish reversal led to the breaking of crucial support levels. Currently, the pair is reversing and trading upside near resistance zone, presenting a potential turning point. If the pair can overcome this Immediate resistance, it may resume its upward trajectory.
TRADE SUGGESTION- STOP BUY – 151.95, TAKE PROFIT AT- 153.40, SL AT- 151.18.