Dollar-yen might retrace amid lower momentum
Although still strongly affected by developing predictions for the funds rate this summer, whether and when the Bank of Japan or the Japanese government might intervene to support the yen has been a more important intrigue for dollar-yen in recent weeks. Despite the BoJ’s exit from 14 years of negative rates, many participants expect the current loose policy to continue for some time.
¥151.95, reached on 3 April, is a 34-year high for USDJPY. As the next significant round number, ¥155 seems like an obvious place for the BoJ to intervene again, so traders are likely to be cautious if the price does continue further up. Equally, with the NFP and inflation coming up in the next several days, usually one would expect large traders to avoid positions until after the results given their unpredictable nature.
Momentum on the chart has also been much lower as the price has tested ¥152 for the third time since October last year. With the slow stochastic consistently signalling overbought since late March and ATR declining to new lows, it’d be possible to see a significant correction depending on upcoming economic data.
Most of the time, second and subsequent tests of important areas are less likely to break through unless accompanied by a strong fundamental driver. Conversely, there’s no clear reason technically and definitely not fundamentally for a reversal of the uptrend.
If the price does retrace in the near future, the main targets would probably be the 50 SMA from Bands around ¥150, the 200 SMA around ¥148 and then March’s low near ¥146.60. Volatility will almost certainly increase significantly in the next few days as the USA releases important data.
This is my personal opinion which does not reflect the opinion of Exness. This is not a recommendation to trade.
¥151.95, reached on 3 April, is a 34-year high for USDJPY. As the next significant round number, ¥155 seems like an obvious place for the BoJ to intervene again, so traders are likely to be cautious if the price does continue further up. Equally, with the NFP and inflation coming up in the next several days, usually one would expect large traders to avoid positions until after the results given their unpredictable nature.
Momentum on the chart has also been much lower as the price has tested ¥152 for the third time since October last year. With the slow stochastic consistently signalling overbought since late March and ATR declining to new lows, it’d be possible to see a significant correction depending on upcoming economic data.
Most of the time, second and subsequent tests of important areas are less likely to break through unless accompanied by a strong fundamental driver. Conversely, there’s no clear reason technically and definitely not fundamentally for a reversal of the uptrend.
If the price does retrace in the near future, the main targets would probably be the 50 SMA from Bands around ¥150, the 200 SMA around ¥148 and then March’s low near ¥146.60. Volatility will almost certainly increase significantly in the next few days as the USA releases important data.
This is my personal opinion which does not reflect the opinion of Exness. This is not a recommendation to trade.