Technical Analysis

USD/JPY Price Analysis – June 13, 2024

By LonghornFX Technical Analysis
Jun 13, 20243 min

Daily Price Outlook

The USD/JPY currency pair has maintained its upward momentum and remained well bid around 157.09, hitting the intra-day high of 157.35 level. However, the upward trend was primarily driven by strength in the US Dollar.

The bullish trend in the USD can be attributed to the Federal Reserve's unexpectedly hawkish stance following its recent policy meeting. The Fed revised its projections, signaling a reduced likelihood of rate cuts this year due to expectations of higher inflation.

Fed’s Hawkish Outlook Supports USD/JPY Amid Soft US CPI

On the US front, the Federal Reserve's hawkish outlook has played a major role in supporting the USD/JPY pair. The hawkish stance overshadowing softer-than-expected US Consumer Price Index (CPI) data released recently.

The US CPI figures for May showed no change month-over-month and a slight decrease in the yearly rate to 3.3% from 3.4% in April. Moreover, the core CPI, excluding volatile food and energy prices, dropped to 3.4%, marking its lowest level in over three years.

Despite modest US Consumer Price Index (CPI) figures, the Fed's confidence has bolstered market expectations of a robust US economy and the possibility of future interest rate hikes. This positive sentiment has favored the USD over the Japanese Yen, contributing to the upward trend in the USD/JPY exchange rate.

Traders Await BoJ Decision Amid Reluctance in USD/JPY Directional Bets

Looking ahead, traders are exercising caution and hesitating to place significant directional bets on the USD/JPY pair as they await the outcome of the Bank of Japan (BoJ) policy meeting.

This decision is crucial because there's speculation that the bank might change how it handles its monetary policy, especially in terms of buying government bonds. Such changes could significantly affect the currency pair's direction in the market.

Meanwhile, the uncertainty surrounding the BoJ's stance stems from Japan's economic challenges, including sluggish growth and persistent deflationary pressures. Market participants are keenly watching for any signals that could impact the yen's safe-haven appeal and influence the USD/JPY pair. 

USD/JPY  Price Chart - Source: Tradingview
USD/JPY  Price Chart - Source: Tradingview

USD/JPY - Technical Analysis

The USD/JPY pair is currently trading at $157.20, showing a modest gain of 0.24%. This upward momentum is notable as the pair edges closer to critical resistance levels. The pivot point to monitor stands at $157.72, a crucial level that could influence future price movements.

Immediate resistance is identified at $157.41, with subsequent resistances at $157.91 and $158.43, indicating potential targets for bullish traders. On the downside, immediate support is found at $156.31, followed by additional supports at $155.79 and $155.11.

These levels are significant as they highlight areas where buying interest might emerge to stabilize the price.

The Relative Strength Index (RSI) is at 55, suggesting a neutral to slightly bullish sentiment. The 50-day Exponential Moving Average (EMA) is positioned at $156.40, with the current price trading above this level, reinforcing the bullish outlook.

Technical indicators point towards a bullish trend as long as the price remains above the pivot point of $157.72.

In conclusion, the technical outlook for USD/JPY remains bullish above the pivot point of $157.72. Traders may consider a buy limit order at $156.765, aiming for a take profit level at $157.723. A stop loss should be placed at $156.305 to mitigate risk effectively.

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