USD/JPY Price Analysis – Aud 1, 2023

Daily Price Outlook

The USD/JPY currency pair has prolonged its upward rally and remains strong above the 143.00 level. The pair has experienced a robust rally for three days in a row, reaching a three-week high. However, the Japanese Yen has been weighed down by the Bank of Japan's (BoJ) dovish outlook, as Governor Kazuo Ueda emphasizes the need for continued monetary support and potential further easing.

Besides this, an unscheduled bond-buying operation by the Japanese central bank added to the JPY's weakness. These factors, combined with a risk-on sentiment in the markets, are providing support for the USD/JPY currency pair.

Positive Market Sentiment and Fed Rate Hike Expectations Boost USD/JPY

Investors are feeling very positive about China's potential stimulus measures, which are outweighing concerns about weaker data and contributing to the rise in global equity markets. Moreover, the US Dollar is gaining strength, pushing the USD/JPY pair higher. The USD Index is currently at its highest level since July 10, driven by expectations of further policy tightening by the Federal Reserve (Fed). The recent upbeat US GDP report and comments from Fed Chair Jerome Powell have increased expectations of a rate hike. Higher US Treasury bond yields are also providing support to the USD.

US Economic Data and Risk Sentiment Influence USD/JPY

Investors are keeping a close eye on the upcoming ISM Manufacturing PMI and JOLTS Job Openings data in the US. These indicators could impact the USD price and, along with global risk sentiment, further boost the USD/JPY pair. The fundamental outlook suggests that the pair is likely to continue moving higher, with ongoing support for the USD and downward pressure on the JPY. As the week unfolds, investors will closely monitor economic developments and statements from central banks that could influence the direction of the USD/JPY pair.

USD/JPY - Technical Analysis

The USD/JPY pair exhibits a stronger bullish bias as it approaches our initial target at 143.05. A detailed analysis of the chart reveals the completion of a double bottom pattern, indicating positive targets beyond the mentioned level, with potential objectives at 144.00, followed by 145.05.

Consequently, we maintain our outlook for a bullish trend in the upcoming period, anticipating favorable momentum to drive the price towards the expected targets. It is essential to emphasize that sustaining above 141.40 is crucial to ensure the continuity of the bullish wave.

For today's trading, we anticipate the price to trade within the range of 142.00 support and 143.50 resistance.