Sun, May 19, 2024

USD/JPY Ascends to 156.20, Potential Climb to 160 Levels

Wibest – Yen Exchange Rate: Japanese yen coins. (USD/JPY)

Quick Look:

  • USD/JPY trading above 156.00, indicating sustained bullish momentum.
  • Key support at 155 yen, resistance up to 160 yen.
  • Experts recommend buying on dips, reflecting positive sentiment.
The USD/JPY currency pair continues to showcase its robustness in the forex market. The recent trading sessions saw the US dollar rally robustly against the Japanese yen. The pair trades at approximately 156.20, extending its rally above the 156.00 level, signalling sustained bullish momentum.

USD/JPY Maintains Bullish Trend; Support at 155 and 153

The technical outlook for USD/JPY remains positive, with a clear long-term uptrend. Resistance levels are identified at 156 yen, with further barriers at 158 yen and 160 yen, suggesting potential upward movements. The support structure is also well-defined. Its immediate support is around 155 yen, and stronger foundational support is near the 153 yen mark. For instance, it is very close to the 50-day EMA. These levels indicate key points where traders might see reactions on the price charts. Thereby affirming the long-term bullish trend peppered with short-term buy opportunities.

‘Buy on Dips’ Strategy Favored Amid USD Strength

Given the favourable interest rate differential that benefits the US dollar, the prevailing market strategy is to ‘buy on dips.’ This approach has been effective for many traders who have maintained long positions for several months, strategically adding to their positions during market retractions. The consensus among market experts is to stay invested in long positions, anticipating no fundamental shifts in the near term due to Japan’s ongoing fiscal challenges.

US PPI Rise & Japan’s GDP Growth Key to USD/JPY Future

Key economic indicators and central bank actions also influence the trading pair. Analysts expect the US to release its Producer Price Index, which could increase, potentially boosting the USD further against the JPY. In Japan, recent actions by the Bank of Japan, such as cutting the amount of government bonds purchased, suggest a subtle shift towards a more hawkish monetary policy stance. Moreover, the upcoming release of Japan’s Q1 GDP growth could impact the yen’s strength, particularly if the data exceeds market expectations.

BoJ Shifts to Hawkish Policy, Eyes on Bond Market Impact

Recent interventions by the Bank of Japan have been seen as temporary measures with limited long-term efficacy. However, these actions, including the recent hawkish tilt in policy indicated by reduced bond purchases, will likely impact Japanese bond yields and could subtly influence the yen’s valuation against the dollar.

USD/JPY: Bullish Market Eyes 157 as Next Target

The market sentiment for USD/JPY is overwhelmingly positive, with continuous strength attracting bullish investors. Looking forward, if the pair closes above current resistance levels on shorter timeframes, this could signal further bullish entries, potentially leading to a test of the 157 level. The overarching sentiment remains bullish, with market dynamics favouring a continued rise in the USD/JPY pair as economic data and central bank policies unfold.

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