radex78
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USD/JPY consolidates with a slightly bullish bias
Over the past week, the safe-haven USD/JPY pair has traded range-bound between 157.200 and 158.500. This movement has been driven by the continued rise in US Treasury yields and uncertainty surrounding Bank of Japan (BoJ) policy. On October 8, USD/JPY formed a short-bodied bearish candle with wicks at both the top and bottom; prices ranged from a low of 157.528 to a high of 158.366, closing at 157.891 on the FXOpen chart.
Strong USD is supported by solid 10-year US Treasury yields. Expectations that Federal Reserve interest rates will remain elevated are prompting capital to flow back into dollar-denominated assets. The 10-year US Treasury yield briefly surged to 5.34%, while the DXY hovered around 102.4. FOMC minutes also revealed that a majority of members see the possibility of another rate hike before the end of the year.
US data releases today are relatively light. Markets will be closely watching the University of Michigan Consumer Sentiment and inflation expectations. Of greater importance are movements in Treasury yields; if yields rise above 5.35%, USD/JPY could see upward momentum, whereas a decline in yields could open the door for a correction.
The BoJ appears inclined toward caution. Following a rate hike to 1.25% at the September meeting, signals from within the BoJ ahead of the late-October meeting suggest reluctance to aggressively raise rates again. Market concerns regarding a slowdown in the pace of BoJ policy tightening are weighing on the Yen. The BoJ has noted that inflationary pressures are broadening, and Governor Ueda has emphasized the importance of keeping inflation near the 2% target.
Japanese household spending data due today is also drawing market attention. Consensus forecasts suggest a year-on-year (YoY) figure of around -3.5%, compared to the previous -3.6%. Stronger data could bolster the JPY by reinforcing the belief that the Bank of Japan (BoJ) still has grounds for an interest rate hike. A key factor to watch is the possibility of foreign exchange intervention. With USD/JPY trading in the 158–160 range, the yen is already weak, and the Japanese government has previously affirmed that the principle of coordination with the US regarding FX intervention remains in effect.
Should strong comments emerge from Japan's Ministry of Finance or BoJ officials, USD/JPY could drop rapidly, even amidst strong US fundamentals. Remarks or rumors from BoJ officials leading up to the October 29–30 monetary policy meeting could determine the direction of the USD/JPY trend.
Technically, USD/JPY is trading below the 200-day EMA with an RSI of 51; chasing buy positions at high levels is less than ideal given the strength of US yields and the dollar, alongside the risks of intervention and a potential hawkish shift by the BoJ. The projected daily range for USD/JPY is 157.500–158.500, with an extreme range of 156.800–159.000. Immediate support lies around 157.550, with the next target at 156.800. Immediate resistance is around 158.500, with the next target at 158.800. This forecast could be wrong.
USD/JPY D1
On the daily chart, USDJPY is trading above the middle band. The Bollinger Bands appear to be contracting, indicating a decrease in volatility.
The MA50 sits just above the middle band, tracing a downward channel; the price's position on the line indicates sideways movement. The MA200 lies above the MA50, tracing a flat channel, which indicates sideways movement over a longer timeframe.
The TDI indicator's VB High reads 62 and the VB Low reads 28; the 34-point spread reflects the daily volatility level.
The Market Base Line reads 45 with a flat channel, implying that bearish weight exceeds bullish weight.
The RSI Price Line reads 52 with a flat channel, indicating sideways movement.
The Trade Signal Line reads 54 with a flat channel, indicating sideways movement.
USDJPY H4
On the 4-hour chart, USDJPY is trading near the lower band. A Bollinger Band squeeze reflects a sideways market and low volatility.
The MA50 sits right at the lower band, tracing a flat channel; the price's position on the line indicates sideways movement. The MA200 lies below the lower band, tracing a flat channel, indicating sideways movement.
The TDI indicator's VB High reads 59 and the VB Low reads 46; the 13-point spread reflects the 4-hour volatility level.
The Market Base Line reads 52 with a flat channel, implying that bullish weight exceeds bearish weight.
The RSI Price Line reads 44 with a downward channel, indicating a trend with a bearish bias.
The Trade Signal Line reads 49 with a flat channel, indicating sideways movement.
Over the past week, the safe-haven USD/JPY pair has traded range-bound between 157.200 and 158.500. This movement has been driven by the continued rise in US Treasury yields and uncertainty surrounding Bank of Japan (BoJ) policy. On October 8, USD/JPY formed a short-bodied bearish candle with wicks at both the top and bottom; prices ranged from a low of 157.528 to a high of 158.366, closing at 157.891 on the FXOpen chart.
Strong USD is supported by solid 10-year US Treasury yields. Expectations that Federal Reserve interest rates will remain elevated are prompting capital to flow back into dollar-denominated assets. The 10-year US Treasury yield briefly surged to 5.34%, while the DXY hovered around 102.4. FOMC minutes also revealed that a majority of members see the possibility of another rate hike before the end of the year.
US data releases today are relatively light. Markets will be closely watching the University of Michigan Consumer Sentiment and inflation expectations. Of greater importance are movements in Treasury yields; if yields rise above 5.35%, USD/JPY could see upward momentum, whereas a decline in yields could open the door for a correction.
The BoJ appears inclined toward caution. Following a rate hike to 1.25% at the September meeting, signals from within the BoJ ahead of the late-October meeting suggest reluctance to aggressively raise rates again. Market concerns regarding a slowdown in the pace of BoJ policy tightening are weighing on the Yen. The BoJ has noted that inflationary pressures are broadening, and Governor Ueda has emphasized the importance of keeping inflation near the 2% target.
Japanese household spending data due today is also drawing market attention. Consensus forecasts suggest a year-on-year (YoY) figure of around -3.5%, compared to the previous -3.6%. Stronger data could bolster the JPY by reinforcing the belief that the Bank of Japan (BoJ) still has grounds for an interest rate hike. A key factor to watch is the possibility of foreign exchange intervention. With USD/JPY trading in the 158–160 range, the yen is already weak, and the Japanese government has previously affirmed that the principle of coordination with the US regarding FX intervention remains in effect.
Should strong comments emerge from Japan's Ministry of Finance or BoJ officials, USD/JPY could drop rapidly, even amidst strong US fundamentals. Remarks or rumors from BoJ officials leading up to the October 29–30 monetary policy meeting could determine the direction of the USD/JPY trend.
Technically, USD/JPY is trading below the 200-day EMA with an RSI of 51; chasing buy positions at high levels is less than ideal given the strength of US yields and the dollar, alongside the risks of intervention and a potential hawkish shift by the BoJ. The projected daily range for USD/JPY is 157.500–158.500, with an extreme range of 156.800–159.000. Immediate support lies around 157.550, with the next target at 156.800. Immediate resistance is around 158.500, with the next target at 158.800. This forecast could be wrong.
USD/JPY D1
On the daily chart, USDJPY is trading above the middle band. The Bollinger Bands appear to be contracting, indicating a decrease in volatility.
The MA50 sits just above the middle band, tracing a downward channel; the price's position on the line indicates sideways movement. The MA200 lies above the MA50, tracing a flat channel, which indicates sideways movement over a longer timeframe.
The TDI indicator's VB High reads 62 and the VB Low reads 28; the 34-point spread reflects the daily volatility level.
The Market Base Line reads 45 with a flat channel, implying that bearish weight exceeds bullish weight.
The RSI Price Line reads 52 with a flat channel, indicating sideways movement.
The Trade Signal Line reads 54 with a flat channel, indicating sideways movement.
USDJPY H4
On the 4-hour chart, USDJPY is trading near the lower band. A Bollinger Band squeeze reflects a sideways market and low volatility.
The MA50 sits right at the lower band, tracing a flat channel; the price's position on the line indicates sideways movement. The MA200 lies below the lower band, tracing a flat channel, indicating sideways movement.
The TDI indicator's VB High reads 59 and the VB Low reads 46; the 13-point spread reflects the 4-hour volatility level.
The Market Base Line reads 52 with a flat channel, implying that bullish weight exceeds bearish weight.
The RSI Price Line reads 44 with a downward channel, indicating a trend with a bearish bias.
The Trade Signal Line reads 49 with a flat channel, indicating sideways movement.
