- There has been little change in the performance of the USD/JPY, as it is still stable around its highest in eight months now, at 144.45, and its highest recent resistance was around the 145.06 resistance level.
- The current performance awaits important and influential events, led by the announcement of the content of the minutes of the last meeting of the US Federal Reserve, ending with the announcement of US job numbers.
- The divergence between the accommodative policy of the Japanese central bank and the hawkish policy of the US Federal Reserve is still an important factor for the bulls to control the general direction of the dollar/yen pair for a longer period of time.
In general, the Japanese yen stabilized against the British pound, the dollar, the euro, and others at the opening of the trading of the new month, but it remained near its lowest levels and is likely to benefit more from the single European currency and the pound sterling if the popular “carry trade” recently leads to a decline in the currency again and intervention to support it from Tokyo. The Japanese yen has come close to being the worst-performing major in the past month and this year when the Russian ruble was the only G20 currency to decline more broadly in either period while the pound, euro, Swiss franc, and Norwegian krone ranked among the outperformers.
The Japanese yen has long been used as a funding currency by investors and traders seeking a low-cost way to fund investments in higher-yielding assets elsewhere.
Forex traders tend to invest more commonly in emerging market economy assets, especially over the last decade or so, but sharp increases in interest rates in the developed economy since the late pandemic have now seen other currencies become popular carry trades as well. Japanese borrowing costs have not changed much when measured over the past year or more due to the continued commitment to monetary easing by the Bank of Japan, which expressed doubts about the sustainability of inflation in Japan as recently as June but did not rule out further adjustments to the limits it imposes on bond yields.
USD/JPY Technical Outlook
There is no change in my technical view of the performance of the price of the USD/JPY currency pair, as the general trend is still bullish and its recent gains according to the performance on the daily chart below have moved the technical indicators toward strong overbought levels and on all timeframes.
Therefore, I still prefer selling the currency pair from the highest peaks instead of venturing into buying from them, as Japan may intervene in the forex currency market at any time to stop the collapse of the Japanese yen with more than that. The move towards the support level at 141.20 is a real shift to the general direction of the currency pair.
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