Over the past week, the Japanese Yen has presented both challenges and opportunities for traders, as its price action has fluctuated significantly. This has caused some to feel frustrated, while others have experienced satisfaction in their trading activities.
The essential foundation for Japanese monetary policy remains unaffected at present, despite Kazuo Ueda assuming the position of Governor of the Bank of Japan (BoJ) in the previous month.
The technocrat appears to maintain a stable approach, which may be suitable for the current position amidst other central banks halting their tightening policies.
The Bank of Japan (BoJ) currently implements a policy rate of negative 0.10%. Additionally, the BoJ is employing yield curve control (YCC) by setting a targeted range of plus or minus 0.50% around zero for Japanese Government Bonds (JGBs) with a maturity date of up to 10 years.
The EUR/JPY currency pair experienced an impressive surge, surpassing multiple past high points and reaching its highest level in 15 years. However, it subsequently retreated to the previous trading range.
The USD/JPY currency pair did not have sufficient momentum to establish new highs and lost its bullishness when it reverted back to familiar levels.
USD/JPY TECHNICAL ANALYSIS
On Monday of this week, the USD/JPY rally achieved a breakthrough above the upper boundary of the Bollinger Band, which is based on a 21-day simple moving average (SMA). However, it subsequently retreated back inside the band, thereby indicating a temporary halt to the bullish trend and ultimately resulting in a reversal.
Currently, the currency pair is within an ascending trend channel; however, there are doubts regarding the bullish momentum and its sustainability in the future.
In the event that USD/JPY concludes trading below 132.50, it would be situated beneath all period daily Simple Moving Averages (SMAs) and the upward sloping trend line. This development, viewed from a technical standpoint, may suggest that range trading conditions have been further solidified.
This week’s price action has identified 135.11 as a crucial turning point that could potentially serve as a barrier. Additionally, there exist three prior peaks within the range of 137.77 to 138.17 that may act as resistance points in the future.
Although there is a negative aspect, the previous minimum values at 133.50, 133.00 and 132.00 may provide a level of support before encountering the possible support range of 129.50 – 129.80.