Key Points on USD/JPY Pair:
- Investment Attractiveness: The positive carry trade makes the USD/JPY pair an attractive investment.
- Thursday’s Trading: The US dollar initially experienced a dip but then rebounded, gaining strength against the Japanese yen.
- Support Level: The 158 yen level appears to be a point that attracts buyers.
- Overall Trend: The USD/JPY pair is currently in a strong bullish trend.
- Interest Rate Differential: The main driver for the bullish trend is the substantial interest rate gap between the US and Japan.
- US Rate Policy: The US is aggressively raising interest rates.
- Japan Rate Policy: Japan is maintaining near-zero interest rates.
The upcoming US jobs report on Friday could further fuel this upward momentum. A strong jobs number might signal persistent inflation and prompt the Federal Reserve to delay potential rate cuts. This scenario would likely solidify the current bullish sentiment for the USD/JPY pair, meaning that any pullback is likely to be temporary, presenting a buying opportunity for those seeking a cheaper dollar.
USD/JPY : Key Support Levels
The 158 yen level serves as a crucial area of support, providing a solid base for the dollar. But it’s not the only level to watch. The 156 and 155 yen zones below it also represent potential floors, where buying pressure could resurface in the event of a more pronounced pullback. Conversely, if the US dollar can successfully breach the 159 yen barrier, the next targets are set at 160 yen and subsequently 162 yen. These higher targets reflect the prevailing sentiment of bullish momentum and the limited capacity of the Bank of Japan to significantly influence the market’s course.
The BOJ’s attempts to intervene in the market have largely been perceived as bluffs, with limited long-term effectiveness. Thus far, they have failed to curb the yen’s depreciation, further emboldening dollar buyers. This suggests that the path of least resistance for the USD/JPY pair continues to be upward. While short-term fluctuations are always possible, the underlying macroeconomic forces and policy divergences strongly favor the continued strength of the US dollar against the Japanese yen. Therefore, a bullish stance on the USD/JPY pair remains warranted.
Want to trade USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.
