USD/JPY Price Analysis: Yen Gains as Verbal Intervention Lifts Sentiment, Eyes on 153

The USD staged a strong rebound overnight, delivering volatility-adjusted positive returns in 25 of 28 currency pairs. The biggest gains were against the Japanese Yen $USDJPY, followed by the Thai Baht $USDTHB. #ASEAN currencies were generally weaker. $USDMYR $USDIDR https://t.co/dWljhVcbRX pic.twitter.com/0hMYk7MtQy

— Lolo 3ben (@3benson) October 23, 2024

While this intervention temporarily halted the Yen’s depreciation, uncertainty surrounding the Bank of Japan’s (BoJ) future interest rate decisions has complicated its outlook. With Japan’s general election approaching on October 27, political uncertainty adds another layer of complexity. Recent opinion polls suggest that the ruling Liberal Democratic Party (LDP) could lose its majority, casting doubt on the BoJ’s ability to continue its rate-hike trajectory. Consequently, the Yen’s recovery has been somewhat capped, leading to mixed sentiment in the USD/JPY pair.

US Dollar Gains Support Amid Fed Expectations and Economic Data

On the US side, the dollar has found some support due to shifting expectations around the Federal Reserve’s (Fed) future actions. Investors expect the Fed to adopt a more cautious approach in 2024, with modest rate cuts likely to follow the US election. This dovish outlook has driven up US Treasury bond yields, providing a cushion for the dollar, and in turn, preventing the USD/JPY pair from declining further.

Market participants are closely watching for new economic data, particularly the release of flash US PMI numbers. These figures will likely have a strong influence on the dollar’s price dynamics and could help set the short-term direction for the USD/JPY pair. Additionally, a recovery in equity markets could also provide support to the dollar, potentially attracting dip-buying and helping stabilize the pair.

$USDJPY it resume higher as expected and yet can see more upside shown from yesterday's midday update. #Elliottwave #Forex pic.twitter.com/8XjoPOZV0Z

— Elliottwave Forecast (@ElliottForecast) October 24, 2024

USD/JPY Technical Outlook

From a technical perspective, the USD/JPY pair has recently bounced back after testing critical Fibonacci retracement levels. As of now, the pair is trading at 152.11, just above the crucial 61.8% Fibonacci retracement level of 151.82. A close above this level suggests further upside potential, especially with support from the upward sloping trendline.

Immediate resistance can be found at 152.66, with further targets at 153.18 and 153.88. On the downside, immediate support lies at 151.81, with subsequent support levels at 151.45 and 150.97.

Technical indicators point to a continuation of the uptrend. The Relative Strength Index (RSI) is currently at 54.91, indicating moderate momentum. The 50-day Exponential Moving Average (EMA), situated at 151.81, reinforces the current uptrend, suggesting that as long as the pair remains above this level, buying pressure could continue to dominate.

Key Takeaways:

• A close above 61.8% Fibonacci retracement at 151.82 signals bullish momentum.

• Immediate resistance at 152.66, with further targets at 153.18 and 153.88.

• Key support levels to watch are 151.81 and 151.45.

In conclusion, the USD/JPY pair remains poised for further gains, with the 151.82 level serving as a key pivot point. As traders await economic data and policy updates, the technical outlook suggests a bullish bias if the pair sustains momentum above current support levels. However, political uncertainty and global economic factors could still influence the broader trend.