- The weakness of the US dollar against other major currencies last week increased the bearish momentum for the USD/JPY currency pair.
- It pushed it down with losses extending to the support level of 142.05, the lowest for the pair in six months, before closing the week’s trading around the 143.43 level in desperate attempts for an upward reversal.
- The currency pair will be affected in the coming days by the future policies of central banks, especially the Bank of Japan, and the pace of investor risk appetite or aversion.
Yen Exchange Rate and Impact on Japanese Policies
In this regard, the Chairman of the Policy Committee of the Japanese ruling party said before the start of trading this week that Japan should strengthen the yen, including by helping to enhance the country’s industrial competitiveness, as the currency’s weakness has led to higher household living costs. Itsunori Onodera, chairman of the Liberal Democratic Party’s Policy Research Council, emphasized that Japan should not deliberately sell its holdings of US Treasury bonds in retaliation for the tariffs imposed by President Donald Trump.
He added, “As an ally of the United States, the government should not consider deliberately using its holdings of US Treasury bonds,” rejecting an opposition deputy’s suggestion that Tokyo use its massive holdings of US government debt as a negotiating tool in bilateral trade talks.
Trading Tips:
I still prefer buying USD/JPY from every downward level.
US Stock Markets Attempt to Recover
By the end of last week’s trading and across stock trading company platforms, Wall Street stocks rose, ending a volatile week amid trade hopes. Investor sentiment had risen thanks to hopes for a potential trade agreement between the United States and China. According to performance, the S&P 500 index rose by 1.8%, the Nasdaq by 2%, and the Dow Jones by 618 points. Optimism increased after the White House stated that President Trump is “optimistic” that China will seek an agreement, even as trade tensions escalated with Trump raising tariffs on Chinese goods to 145%, and China responding by imposing 125% tariffs on US imports.
On the economic front, according to the economic calendar data results, a University of Michigan survey showed US consumer confidence falling to its lowest levels since 2022, with inflation expectations reaching a peak not seen since 1981. Meanwhile, the earnings season kicked off with mixed results for banks – Wells Fargo shares fell by 1%, while Morgan Stanley shares rose by 1.4%, and JPMorgan shares rose by 4% after reporting record revenues.
Overall, during last week’s trading, the S&P 500 jumped 5.7%, the Nasdaq climbed 7.3%, and the Dow Jones rose nearly 5%, recording its best weekly performance in more than a year, driven by a historic high in mid-week trading.
USD/JPY Technical analysis and Expectations Today:
By observing the performance on the daily timeframe chart, the overall trend for USD/JPY is strongly bearish, and it appears closest to its peak if bears succeed in moving towards the psychological support level of 140.00. From there and from lower levels, buying USD/JPY is preferred. The support level of 141.60 is currently the most important for anticipating a move towards the psychological support. This level is also sufficient to push technical indicators towards strong oversold levels, as clearly shown by the performance of the Stochastic oscillator, the 14-day RSI, and the MACD. Conversely, on the same timeframe, the first break of the bearish trend will be an initial move towards the resistance level of 147.80, which leads us to the psychological resistance of 150.00.
The USD/JPY pair is not awaiting any significant economic data releases, so investor sentiment regarding risk appetite will be a key factor in determining the pair’s direction.
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