Fundamental Analysis
Japanese Yen Strength
- The JPY remains supported by rising expectations that the Bank of Japan (BoJ) will continue its rate hike cycle.
- Recent statements from Governor Kazuo Ueda and Deputy Governor Himino reinforce the possibility of further adjustments if inflation and growth align with projections.
- The 10-year Japanese bond yield has reached levels not seen since 2010, reflecting expectations of a more restrictive monetary policy.
US Dollar Weakness & Policy Divergence
- The USD is under pressure due to expectations that the Federal Reserve (Fed) will maintain its current stance and eventually cut rates in 2025.
- The narrowing interest rate differential between Japan and the US has favoured capital flows into the JPY.
- The release of the FOMC minutes will be key in determining the USD/JPY direction, as they may provide clearer signals about the Fed’s future monetary policy.
Geopolitical Factors & Market Sentiment
- The recent meeting between US and Russian officials in Saudi Arabia to discuss the war in Ukraine could impact global risk perception.
- A delay in implementing new US tariffs has fueled a higher appetite for risk, limiting the JPY’s demand as a safe-haven asset.
- Despite these factors, the current USD/JPY trend suggests resistance to further upside while the BoJ continues tightening its policy.
Technical Analysis
USD/JPY – H4
- Supply Zones (Sell): 152.64 // 154.22 // 155.25
- Demand Zones (Buy): 151.76
- The pair has been in a bearish phase since January, with the last validated daily resistance at the February high of 155.88.
- This structure is contained within a descending linear regression channel, with weekly volume concentrations at higher levels, confirming clear supply zones (sell).
- However, a moderate shift has been observed since last week when a lower POC formed around 151.96 and was slightly broken with minimal downside.
- Price consolidation around 151.76 suggests a potential reversal scenario.
- A decisive break above the upper channel limit would be the first sign of bullish exhaustion, confirmed by breaking the last validated daily resistance at 155.88.
- If the price drops below 151.00, the bullish scenario will be invalidated, and the 154.80 level (last validated daily resistance) will act as a reference for a potential trend shift.
Technical Summary
Bullish Scenario:
- Buy opportunities above the weekly volume concentration at 151.76, targeting the daily POC at 152.64, from where a pullback towards 151.76 may occur.
- A decisive break above 152.64 could extend the rally towards 154.00 and 154.22.
Bearish Continuation Scenario:
- A decisive break below 151.76 and 151.40 would signal stronger bearish control, confirmed by breaking the 151.21 support.
- In this case, selling pressure could extend towards 150.00 and 149.00, the December lows.
Always wait for the formation and confirmation of an Exhaustion/Reversal Pattern (ERP) on M5 before entering a trade in the key zones indicated.
Discovered POC:
- POC = Point of Control: The level or zone where the highest volume concentration occurred.
- If a bearish move originated from this level, it is considered a sell zone (resistance).
- If a bullish impulse originated from this level, it is considered a buy zone (support)
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