USD/JPY consolidated around 157.60 on Wednesday, with the Japanese yen falling for a fourth consecutive day. Amid Japan’s long weekend, markets are closely monitoring the possibility of currency intervention.
Concerns intensified following reports that the Bank of Japan conducted rate checks with market participants at the end of last week. Japanese authorities have previously intervened during periods of low holiday liquidity, so current USD/JPY levels are once again attracting heightened attention.
A strong US dollar is placing additional pressure on the yen. Hawkish comments from Federal Reserve officials are supporting expectations of further US rate hikes and keeping the US currency attractive.
The yen lost ground last week even after the Bank of Japan delivered an expected rate hike. Governor Kazuo Ueda reaffirmed his readiness to continue tightening monetary policy as economic conditions evolve, but noted that financial conditions would remain sufficiently accommodative to support the economy.
Technical Analysis
On the H4 USD/JPY chart, the market has formed a consolidation range below 158.00. A downside breakout could open the way for a decline towards 155.20.
The MACD indicator supports this bearish scenario. Its signal line remains above zero but is pointing firmly downwards.
On the H1 USD/JPY chart, the market completed an upward move towards 158.00, followed by a correction to 156.56. A triangle pattern has now formed.
A break above the upper boundary at 157.60 is expected, followed by a reversal lower towards 156.50, with the decline potentially extending towards 155.20.
The Stochastic oscillator supports the subsequent bearish scenario. Its signal line remains below 80 and appears poised to turn lower towards 20.
Conclusion
USD/JPY is consolidating around 157.60 as the yen extends its losing streak to a fourth day. Markets remain alert to the possibility of currency intervention amid the long weekend in Japan, with reports that the BoJ conducted rate checks further heightening concerns.
At the same time, a strong US dollar continues to weigh on the yen as hawkish Fed comments support expectations of further US rate hikes. Although the BoJ raised rates last week and Governor Kazuo Ueda reaffirmed his readiness to tighten policy further, financial conditions are expected to remain sufficiently accommodative to support the Japanese economy.
From a technical perspective, a break above 157.60 is expected in the short term. Once this move is complete, the H1 scenario envisages a reversal towards 156.50, with the decline potentially extending towards 155.20. A downside breakout from the H4 consolidation range would reinforce the broader bearish scenario towards 155.20.
