USD/JPY: Spike Higher as Financial Institutions React Quick

Robert Petrucci

The USD/JPY spiked higher yesterday as financial institutions seemingly got the message the Japanese government doesn’t intend on changing its monetary policy anytime soon.

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The yen is a popular asset during turbulent times.

As of this morning the USD/JPY is trading above the 132.900 mark, which is a height not seen since April of 2022. In January of 2002 the USD/JPY traded at nearly 134.750 momentarily, so the current values of the Forex pair while breathtaking have been seen before. Financial institutions reacted quickly yesterday when the USD/JPY broke the 131.350 price which was seen as important resistance.

Technical traders who are trying to calculate current resistance levels have a choice of looking at twenty year old charts or picking psychological numbers they feel are appropriate.  While a rise above the 133.000 mark at the beginning of 2022 may have seemed farfetched, the reaction to the Bank of Japan’s decision to keep their current interest rate policy in place as the U.S Federal Reserve raises its rates is obviously having an effect on the USD/JPY.

Day traders need to be cautious. The USD/JPY can move extremely fast and certainly we are seeing values not traded in twenty years. However, the USD/JPY could continue to incrementally test new highs in the coming days as financial institutions try to find what they believe is a justified equilibrium for the pair.

Before traders say there is no way the USD/JPY can go much higher, they should keep in mind the values seen in January of 2002 near the 134.00 vicinity. Additionally they may want to consider the USD/JPY was trading near 144.000 in August of 1998.

Intriguingly the difference between short term speculators and long term investors may start to become rather dramatic in the coming weeks and months. While financial institutions try to take advantage of the difference in the higher U.S interest rate compared to Japan’s for the moment, there is a likelihood that at some point the loss of value in the Japanese Yen will curtail. The Japanese Yen remains an extremely vital currency in world trade and at some point it will gain value against the USD. The question is when this will happen and it may not occur near term.

Short term traders who are brave enough to try and pursue the upwards movement of the USD/JPY are urged to be cautious.  The ability of the Forex pair to act in lightning bolt moves is legendary. However, for the moment the Bank of Japan seems intent on letting the USD/JPY to continue traversing upwards. A move towards the 133.500 juncture in the near term would not be as surprising as some may think. Tactics such stop loss, take profit and entry price orders are urged for anyone trading the USD/JPY under the present market conditions.

USD/JPY Short-Term Outlook

Current Resistance: 133.090

Current Support: 132.430

High Target: 133.510

Low Target: 131.440

USD/JPY

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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