USD/JPY Price Analysis – April 25, 2024
Daily Price Outlook
Despite the bearish US dollar, the USD/JPY currency pair has maintained its upward trend and remained well-bid around the 155.50 level, hitting the intraday high of 155.75. However, the reason behind this upward trend is the divergent monetary policy expectations between the Bank of Japan (BoJ) and the Federal Reserve (Fed).
It should be noted that the Bank of Japan (BoJ) is not planning to raise its interest rates or make its monetary policy less accommodative in the near future. On the other hand, the Federal Reserve (Fed) is expected to delay reducing its interest rates despite inflationary pressures, which suggests that the Fed may keep its monetary policy relatively tighter compared to the BoJ.
Therefore, this difference in monetary policy stances has led to a significant interest rate differential between the US dollar and the Japanese yen. Investors are attracted to the higher interest rates offered by the US dollar, which has contributed to the USD/JPY currency pair's bullish trend, meaning the US dollar is strengthening against the Japanese yen.
US Dollar's Bearish Bias and Its Impact on USD/JPY
On the US front, the broad-based US dollar has shown a bearish bias recently, although it has not significantly dampened the USD/JPY pair's upward momentum. However, the losses in the US dollar can be attributed to the risk-on market sentiment, which tends to weaken the safe-haven appeal of the dollar. However, these losses have been offset by slight gains in US Treasury yields, providing some support to the dollar.
Moving on, the upcoming release of the US GDP figures is expected to offer insights into the strength of the US economy and the future moves of the Fed. If the GDP report shows better-than-expected numbers, it could lead to speculation that the Fed will delay its rate-cut plans, providing further support to the USD/JPY pair.
USD/JPY - Technical Analysis
The USD/JPY pair has shown a notable increase today, rising by 0.23% to a price of 155.689. This movement positions the currency pair slightly above its pivot point of 155.166, signaling potential bullish momentum as it traverses the four-hour chart framework.
At this juncture, USD/JPY faces immediate resistance at 156.330. Should the momentum continue, the pair could encounter further resistance at 157.099 and 157.891. These resistance levels are crucial markers that could define the upper boundaries of the current bullish trend.
Conversely, the support structure for USD/JPY begins at 154.187. Additional support levels are observed at 153.488 and 152.626. A drop below these levels could signify a reversal or a deeper pullback, making them significant for traders monitoring potential downturns.
The technical indicators suggest a robust uptrend. The Relative Strength Index (RSI) stands at 80, indicating a strong buying pressure, though also approaching overbought territory which could suggest a near-term pullback. Meanwhile, the 50-day Exponential Moving Average (EMA) at 151.271 remains well below the current price, underscoring a strong upward trend over the past weeks.
Given the current technical landscape, a strategic approach would involve placing a buy limit order at 155.144. This position leverages the pair's current momentum, aiming for a take profit target at 157.065, while a stop loss at 154.199 would protect against unforeseen declines.
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