After breaking above 160, USD/JPY fell sharply as Japanese officials warned that intervention could be near. Market rumors also suggested that authorities had been calling banks to check market conditions before possible yen-buying action. The rumored intervention amount was around ¥5.48 trillion, or roughly $35 billion, after USD/JPY briefly reached about 160.7. Earlier in the week, the Bank of Japan kept interest rates unchanged at 0.75% as it continued to assess the impact of higher oil prices on the economy.
WTI oil prices rose again as oil supply remained tight despite ongoing negotiations around the Iran ceasefire. Global stock markets also had another strong week, supported by continued positive earnings reports from U.S. companies, which encouraged further buying.
Markets This Week
U.S. Stocks
U.S. stocks continued to test higher last week despite higher oil prices, with technology stocks performing especially well as markets focused on positive company earnings. The Dow’s technical indicators are pointing sideways for now, but there is still potential for new highs if there is positive news from negotiations between Iran and the U.S.
Resistance levels are at 50,000, 50,500 and 51,000. Support is seen at 48,500, 48,000, 47,000, 46,000, and 45,000.
Japanese Stocks
Japanese stocks hit new record highs early last week, but continued high WTI oil prices worried investors due to the potential negative impact on the Japanese economy. The stronger yen had little impact on the Nikkei, which continued to hold near high levels.
The market is now facing resistance around 60,000, and with prices close to the 10-day moving average, short-term range trading looks likely. Resistance is seen at 60,000, 60,500, 61,000, 61,500 and 62,000, while support is at 58,500, 57,000, 56,000, 55,000, 54,000, and 52,000.
USD/JPY
USD/JPY pushed higher for most of last week as WTI oil prices moved up and the market tested Japan’s willingness to intervene. The move above 160.50 to new highs for the year was followed by rumored intervention by the Bank of Japan, with the pair falling around 500 points in just a few hours.
This week could be highly volatile, especially with Japanese holidays creating thinner market conditions. The Bank of Japan may take advantage of this environment to push USD/JPY lower again.
Resistance is at 158.00, 159.00, 160.00, 160.50, 162.00 and 165.00, while support is seen at 156.00, 155.50 and 155.00.
Gold
Gold remained under pressure last week as long-term U.S. interest rates continued to rise on inflation concerns, supported by higher crude oil prices. The Federal Reserve also indicated that it remains concerned about inflation, which could delay any interest rate cuts.
With the 10-day moving average turning bearish, selling opportunities may dominate. Resistance is at $4,665, $4,750, $4,900, $5,000, and $5,100, while support is at $4,550, $4,500, and $4,400.
Crude Oil
The continued closure of the Strait of Hormuz, alongside ongoing negotiations and no clear resolution in sight, pushed WTI crude oil back above $100 as traders targeted yearly highs again.
The technical uptrend remains strong, with buying opportunities near the 10-day moving average favored. Resistance is at $110 and $120, while support is at $100, $90, $80, $75, $70, and $67.50.
Bitcoin
Bitcoin traded sideways last week as cautious buying continued. Former resistance around $75,000 has turned into support, helping to maintain a positive short-term outlook.
As long as Bitcoin holds above $75,000, buying on dips may remain the preferred strategy. Resistance is at $80,000, $85,000, and $90,000, while support is at $75,000, $65,000, $60,000, and $55,000.
This Week’s Focus
- Monday: Australia Building Approvals, U.S. Factory Orders
- Tuesday: Australia RBA Interest Rate Decision, U.S. Trade Balance, S&P Global Services PMI, New Home Sales
- Wednesday: Eurozone Services PMI, U.K. Services PMI, U.S. ADP Employment Change
- Thursday: Japan Monetary Policy Meeting Minutes, Australia Trade Balance, U.K. Construction PMI, U.S. Construction Spending
- Friday: Japan Services PMI, U.S. Nonfarm Payrolls, Michigan Consumer Sentiment
USD/JPY will be in focus this week as traders assess whether Japanese authorities can slow yen weakness, or if the recent pullback proves temporary while the interest rate gap between the U.S. and Japan remains wide.
WTI oil prices continue to trend higher, although their broader market impact appears to be stabilizing for now. That could change quickly if prices break to new highs.
Friday’s U.S. employment report will be the key economic release to watch, with potential to drive expectations for Federal Reserve policy and broader market direction.
