This week, the Bank of Japan’s policy meeting is the main event on Friday.
Governor Kazuo Ueda’s comments about a possible shift away from ultra-loose policy have raised expectations of a change.
USDJPY: Day Chart
Given the upcoming FOMC decision on Wednesday, investors may once again become worried about the potential for the JPY to depreciate further, especially if the Fed’s message leans towards a more hawkish stance or the summary of economic projections highlights higher inflation rates than previously anticipated.
On the other hand, currency intervention from the Japanese Ministry of Finance
The Japanese yen is currently in a bearish position against the US dollar. Although USD/JPY ended the previous week with little change, the reversal in strength seen earlier in the week on Friday emphasises the broader upward technical bias for the exchange rate.
The 20-day moving average has been crucial in maintaining the bullish trajectory, while the inflexion zone at 146.56 has been controlled. However, it should be noted that a negative RSI divergence is present, which is a sign of fading upside momentum and can sometimes lead to a lower turn.
Despite this, rising support from earlier this year is still maintaining the longer-term bullish bias, and further losses would be required to reverse the upside posture.
The immediate resistance is the 61.8% Fibonacci extension level at 148.27, with clearing higher exposing last year’s high of 151.94.
