USD/JPY has been bullish since early January, hitting a year high just below 141 yen in late May. However, by the end of last month, it had retreated to around 138.40 due to fears of possible intervention. by Japanese authorities. This was the fourth straight day of deficits. In addition, lower US Treasury yields contributed to the weak US dollar and bearish price action in the US. USD/JPY .
After reaching the 138.40 second area, a bullish winding candlestick pattern formed on the daily chart, signaling a possible reversal in price movement. This pattern formed a support level around 138.40 seconds. However, Thursday witnessed a strong sell-off in the US dollar after May’s weak unemployment claims report, with sellers unsuccessfully attempting to break below the 20-day simple moving average of 138.70 (grey), and this Contributed to maintaining the support level. .
As a result, buyers are now gearing up to push the price towards the 140.00 level. Friday’s price action was weaker than the previous day, but the pair still ended the day 60 pips higher. This means that buyers are starting to return.
Another reason for the Japanese yen’s selling pressure yesterday was the widespread report that the Bank of Japan still believes it needs to continue implementing monetary stimulus. This means the Bank of Japan will not tighten monetary policy soon this year, and certainly will not do so for years to come. The question now is whether US data and the Fed will change bullish sentiment.
Since the appointment of a new BOJ governor earlier this year, there has been speculation about a possible policy shift. Better-than-expected GDP data on Thursday boosted demand for the yen. This has likely reignited hopes of a policy turnaround and pushed the pair to lows near the 138.80 level. However, the 20-day SMA is holding and the price should continue towards 141 first and then 145.
USD/JPY
