Technical Analysis

USD/JPY Price Analysis – May 30, 2024

By LonghornFX Technical Analysis
May 30, 20243 min

Daily Price Outlook

During the European trading session, the USD/JPY currency pair experienced bearish performance, remaining under pressure around the 156.69 level and hitting an intraday low of 156.54.

The declines were driven by a strengthened Japanese Yen following hawkish comments from the BoJ's Adachi. Bank of Japan (BoJ) board member Seiji Adachi's remarks, made on Wednesday, indicated a favorable stance towards raising interest rates if a weaker Japanese Yen (JPY) leads to heightened inflation.

This sentiment led to a strengthening of the JPY, causing the USD/JPY pair to trend downwards. Meanwhile, the US Dollar held its ground amidst anticipation of key US economic releases and a hawkish stance from the Federal Reserve, limiting the USD/JPY pair's declines.

Japanese Yen Gains Ground After BoJ Comments:

As mentioned above, the Japanese Yen (JPY) gained ground in the currency markets following comments from Bank of Japan (BoJ) board member Seiji Adachi. Adachi expressed favorability towards raising interest rates if a weaker JPY leads to heightened inflation, bolstering the JPY's position.

This rise in the JPY's value had a notable impact on the USD/JPY pair, causing it to decline as the JPY strengthened against the US Dollar (USD).

US Dollar Holds Ground Ahead of US Economic Releases:

On the US front, the broad-based US Dollar (USD) managed to hold its ground amidst the recent developments, including hawkish remarks from Federal Reserve officials and anticipation of key US economic data releases.

The Federal Reserve's cautious approach to monetary policy and the anticipation of US Gross Domestic Product Annualized (Q1) data and Core Personal Consumption Expenditures (PCE) Price Index data influenced the USD's stability.

Despite the USD's resilience, the USD/JPY pair faced downward pressure due to the strengthened JPY. The significant yield gap between the US and Japan, fueled by hawkish remarks from Federal Reserve officials, contributed to the USD/JPY pair's downward trend.

Additionally, the BoJ's potential interest rate hike speculation further impacted the pair, as investors turned to the JPY carry trades, leveraging the low-interest JPY against higher-yielding USD assets.

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

USD/JPY - Technical Analysis

USD/JPY is currently trading at $156.760, reflecting a decline of 0.34%. The pivot point at $156.608 is a critical level for determining the next market direction. Immediate resistance is observed at $157.720, with subsequent resistance levels at $158.619 and $159.633.

These resistance levels indicate potential areas where the price might face upward pressure and potentially reverse.

Conversely, immediate support is found at $155.840, followed by $154.630 and $153.649. These support levels are crucial as they could signify further downward movements if the price breaches them.

Technical indicators show the Relative Strength Index (RSI) at 44, suggesting a neutral market sentiment. The 50-day Exponential Moving Average (EMA) is positioned at $156.748, slightly above the current price, indicating potential resistance if the price attempts a rebound.

Given the current market dynamics, the outlook for USD/JPY remains cautiously bullish above the pivot point of $156.608.

The strategy for traders would be to consider buying above $156.620, with a take profit target at $157.718 and a stop loss at $156.030. This approach aims to capitalize on any upward momentum while mitigating risks.

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