The USD/JPY opened slightly lower this morning and sank to a low of nearly 142.325 early, but has climbed upwards incrementally since. The USD/JPY remains dynamically within the higher elements of its long term value. On the 7th of September the USD/JPY currency pair flirted briefly with the 145.000 mark. Technical traders looking for perspective regarding the value of the USD/JPY can look back to July of 1998 for comparisons.
Bank of Japan Remains Transparent and Dovish as the U.S Federal Reserve Signals Hawkishness
Fundamentally the Bank of Japan continues to talk openly about the need to maintain current interest rates which are famously low in Japan, this as the U.S Federal Reserve is likely to increase hike borrowing costs again next week. The BoJ is trying to fight the weakening Japanese Yen with a massive purchasing of Japanese government bonds. The weakening Japanese Yen is proving difficult in Japan, but perhaps the Japanese central bank is hoping a stronger USD will make Japan’s export businesses more robust and help Japan in the long term.
The USD/JPY remains steadily within the upper limits of its price range. Bearish speculators looking for downside price action and are contemplating selling positions, should try to keep their ambitions realistic and look for quick hitting gains. While the USD/JPY opened slightly lower this morning, if resistance levels near the 143.500 realm are flirted with and penetrated, another leg up could develop.
Speculative Conditions Remain Fierce in the USD/JPY
- The Bank of Japan will release its interest rate policy in about ten days; the statement is expected to remain dovish, meaning no significant hike is expected.
- If resistance levels are challenged today, this could set the tone for additional bullish action in the USD/JPY which could flirt with last week’s highs again.
Last week’s highs of 145.000 may have surprised some traders who believe the USD/JPY has been overbought. However, the long term trend of the USD/JPY is not likely coming to an end within the next few days, and speculative elements which pursue buying positions cannot be blamed. The highs seen last week remain in plain sight for the USD/JPY.
Traders’ who are brave enough and can use solid risk taking tactics, may want to pursue more upwards price action from the USD/JPY in the near term. Global market conditions remain nervous and choppy Forex is a certainty, but the trend in the USD/JPY may continue to flirt with upwards momentum allowing bullish traders an opportunity to seek limited moves higher when support levels prove durable.
USD/JPY Short Term Outlook:
Current Resistance: 143.480
Current Support: 142.775
High Target: 144.510
Low Target: 141.200
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