USD/JPY Price Analysis – Dec 19, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair has seen notable bullish trend and edged higher around 156.91 level. However, the pair was influenced by the Bank of Japan's (BoJ) recent policy decision.
The BoJ decided to keep its short-term interest rate target unchanged in the range of 0.15%-0.25%. This decision, coupled with BoJ Governor Kazuo Ueda's remarks indicating no immediate rate hikes in the first quarter of 2025, has weakened the Japanese Yen. This has pushed USD/JPY currency higher.
On the other hand, the US Dollar remains strong due to the Federal Reserve's outlook. Even though the Fed lowered rates by 25 basis points last Wednesday, bringing the benchmark rate to 4.25%-4.50%, they indicated that future rate cuts will be slower than expected.
The Fed now expects only two small rate cuts in 2025, down from four previously. This change has kept US Treasury bond yields high, which supports the USD.
As a result, the USD/JPY pair has been rising, with the US economy showing strength compared to the Bank of Japan's cautious approach.
US Economic Data and Geopolitical Tensions Impacting USD/JPY Pair Outlook
Moreover, the Japanese Yen still holds appeal as a safe-haven currency as risk-off sentiment stemming from global geopolitical tensions and potential trade disruptions could provide some support to the Yen.
However, the safe-haven demand for JPY has been muted against the backdrop of the Fed’s tightening policy.
Moving ahead, market participants are keeping an eye on upcoming US economic data, including the final Q3 GDP print and Weekly Initial Jobless Claims.
These data points will offer insights into the health of the US economy and could influence USD/JPY movements.
Meanwhile, the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday will be a key event for inflation expectations.
A stronger-than-expected PCE report could further fuel USD strength and push the USD/JPY pair to new highs, while weaker data may offer some relief for the Yen.
USD/JPY – Technical Analysis
The USD/JPY pair is trading at 155.34, posting a 0.34% gain for the day. On the 4-hour chart, the pair continues its upward trajectory, supported by robust bullish momentum. The pivot point is at 154.54, with immediate resistance at 155.86.
If this level is breached, the next upside targets are 156.72 and 157.59. On the downside, immediate support lies at 153.49, followed by deeper levels at 152.24 and 151.02.
Technical indicators underscore strong bullish sentiment. The RSI at 74 suggests overbought conditions, indicating that the pair could face some short-term consolidation or a minor pullback. However, the price remains above the 50 EMA at 153.83, signaling that buyers are firmly in control in the medium term.
If USD/JPY holds above the pivot point at 154.54, the bulls could aim for a test of 155.86. A sustained break above this level may open the path toward 157.59. On the other hand, a move below 153.49 would likely see the pair testing support at 152.24, although the broader trend remains bullish.
Traders may consider a buy limit at 154.54, targeting 156.01, with a stop-loss at 153.93 to manage downside risks.
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