USD/JPY Breaks Past Key Level at 156.15 Amid Dollar Strength, Yen Weakness

The U.S. dollar’s rally, often termed the “Trump trade,” is supported by inflation-stimulating policies and a Federal Reserve inclined to hold off on further rate cuts. In October, the U.S. Consumer Price Index (CPI) increased 2.6% year-over-year, while core CPI, excluding food and energy, rose 3.3%. Both figures matched forecasts, reinforcing dollar strength.

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Weak Yen Contributes to USD/JPY’s Upward Momentum

Japan’s yen remains under pressure, primarily due to political uncertainties and challenges to its economic stability. While Japan’s Producer Price Index (PPI) surged at its fastest annual pace in over a year, doubts over the Bank of Japan’s timing for rate hikes persist. Investors are also wary of potential U.S.-imposed tariffs, which could weigh on Japan’s economic outlook. Although there is speculation that Japan’s government may intervene to prevent excessive yen depreciation, these concerns continue to weigh down the currency.

Key drivers of yen weakness include:

• Uncertainty: Japan’s political landscape complicates forecasting Bank of Japan policies.

• Trade Concerns: Potential U.S. tariffs add to economic uncertainty.

• Market Intervention: Possibility of Japan intervening to stabilize yen.

USD/JPY Price Forecast: Resistance and Support Levels

Technically, USD/JPY maintains a bullish outlook. The pair recently surged above the 1.618 Fibonacci extension at 156.32, now acting as a significant level to monitor. Immediate resistance levels lie at 157.31 and 158.01, which could be tested if the dollar maintains its strength.

#Japanese Yen continues losing ground against USD; fresh multi-month low and counting
The bullish #USD contributes to the #USDJPY pair’s move-up to a multi-month top.#XAUUSD #xauusdsignals #XAUUSDSIGNAL #NFP
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— Adiva_ (@_Trade_Trends) November 14, 2024

On the downside, key support levels are positioned at 155.43, followed by 154.50 and 154.18. The 50-period EMA, currently around 153.58, underlines the ongoing bullish momentum. Meanwhile, the RSI hovers near 69.44, suggesting potential overbought conditions that could trigger a short-term pullback.

Key Points:

• Immediate Resistance: 157.31 and 158.01.

• Support Levels: 155.43, 154.50, and 154.18.

• RSI Warning: Nearing overbought territory at 69.44.

Given the technical setup, entering around 155.43 with a target of 156.71 aligns with the upward trend. However, traders should be cautious of potential corrections, as the RSI signals a possible short-term retreat. As long as USD/JPY remains above the pivot at 155.43, the bullish outlook is likely to hold steady, driven by broader dollar strength and yen weakness.