The Japanese Yen (JPY) is recovering slightly after hitting a one-week low against the US Dollar (USD), trading in neutral territory as the European session begins on Thursday. The growing expectation that the Bank of Japan (BoJ) will raise interest rates at the conclusion of its two-day policy meeting on Friday continues to provide support to the JPY. In addition, Japan’s better-than-expected Trade Balance data has further bolstered the currency.
However, JPY bulls remain cautious, particularly due to concerns over US President Donald Trump’s trade policies and ahead of the BoJ’s highly anticipated policy announcement. Moreover, a modest uptick in US Treasury bond yields has provided some momentum to the USD, supporting the USD/JPY pair. These diverging expectations between the BoJ and the Federal Reserve (Fed) warrant caution, and traders are looking to Trump’s upcoming speech for new market direction.
From a technical standpoint, the USD/JPY pair found solid support earlier this week at the lower end of a multi-month-old ascending channel, triggering a rebound. Strength above the 156.00 level and the 156.30-156.35 region favors bullish sentiment. Additionally, oscillators on the daily chart are gaining positive momentum, supporting the outlook for further gains.
A potential follow-through move could see the pair targeting the 156.75-156.80 area, with the 157.00 level serving as a key resistance point. A decisive break above 157.00 would open the door for further upward movement, potentially reaching the 157.55 area, the 158.00 level, and the 158.35-158.40 region, as well as the 159.00 zone, marking a multi-month high reached on January 10.
On the downside, the 156.30-156.25 area is expected to provide initial support, with the 156.00 mark offering the next line of defense. Further support is located near 155.55-155.50, and if this level is breached, the pair could accelerate its decline toward the psychological 155.00 level, which coincides with the lower boundary of the ascending channel. A break below 154.80-154.75 would likely trigger fresh bearish momentum, sending the USD/JPY pair toward the 154.00 round figure, with further targets in the mid-153.00s and the 153.00 level.
Related topics:
Retail Investor Sell-off Threatens to Derail China’s Stock Market Recovery
China’s Securities Regulator Pledges to Stabilize Market Amid Sluggish Start to 2025
