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The Japanese Yen (JPY) struggles to capitalize on a modest Asian session uptick against its American counterpart and languishes near a three-month low touched this week. Speculations that the loss of the parliamentary majority by Japan’s ruling coalition could make it difficult for the Bank of Japan (BoJ) to tighten its monetary policy further turn out to be a key factor that continues to undermine the JPY. Adding to this, the prevalent risk-on environment fails to assist the safe-haven JPY in attracting any meaningful buyers. Any further JPY depreciating move, however, seems limited amid fears that Japanese authorities will intervene in the market to prop up the domestic currency. Traders might also refrain from placing aggressive directional bets and opt to the sidelines ahead of the crucial BoJ decision on Thursday. This, along with key US macro releases – including the Advance Q3 GDP print, the Personal Consumption Expenditure (PCE) Price Index, and the Nonfarm Payrolls (NFP) report – should provide a fresh impetus to the USD/JPY pair.
Daily Digest Market Movers: Japanese Yen seems vulnerable as political turnmoil dampens hopes for further BoJ rate hikes
Technical Outlook: USD/JPY needs to find acceptance above the 61.8% Fibo. level for bulls to retain near-term control
From a technical perspective, last week’s breakout through the 150.65 confluence – comprising the 100-day Simple Moving Average (SMA) and the 50% Fibonacci retracement level of the July-September downfall – was seen as a fresh trigger for bulls. That said, this week’s repeated failures to find acceptance or build on the momentum beyond the 61.8% Fibo. level warrants some caution. Moreover, the Relative Strength Index (RSI) on the daily chart remains close to the overbought zone, making it prudent to wait for some near-term consolidation or a modest pullback before positioning for further gains. Any subsequent slide below the 153.00 mark, however, is likely to find some support near the overnight swing low, around the 152.75 region, ahead of the 152.40 area, or the weekly through. Some follow-through selling could drag the USD/JPY pair to the 152.00 mark en route to the 151.45 support and the 151.00 mark. The downward trajectory could extend further towards challenging the 150.65 confluence resistance breakpoint, which should now act as a key pivotal point and a strong base for spot prices.On the flip side, the 153.85-153.90 region now seems to have emerged as an immediate strong barrier. A sustained strength beyond, leading to a breakout through the 154.00 mark, could lift the USD/JPY pair beyond the 154.35-154.40 supply zone, towards reclaiming the 155.00 psychological mark. Spot prices could eventually climb to test the late-July swing high, around the 155.20 region.More By This Author:US Dollar Steady Ahead Of Key Data, Mixed JOLTSUSD/JPY Is Testing 153.90 High Ahead Of US Labour Data US JOLTS Job Openings Expected To Resume Downward Trend In September
