USD/JPY Price Analysis – Nov 14, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair extended its upward momentum, staying strong around the 155.99 level and reaching an intraday high of 156.15.
This bullish movement can be largely attributed to the strengthening US dollar, supported by upbeat US economic data and the continuation of the so-called “Trump trade.” Meanwhile, the Japanese yen remains under pressure.
Despite Japan's Producer Price Index (PPI) rising at its fastest annual pace in over a year in October, uncertainty around Japan's political landscape has cast doubts on the Bank of Japan's (BoJ) intentions regarding rate hikes, which further weakened the yen and boosted the USD/JPY pair.
USD/JPY Rises as Weak Yen Faces Economic Challenges and Political Uncertainty
However, the rise in the USD/JPY came from the weaker Japanese yen, which is under pressure due to several factors. Despite Japan's Producer Price Index (PPI) rising at its fastest pace in over a year in October, the yen remains weak.
This is partly due to uncertainty surrounding Japan's political situation, which makes it harder to predict the Bank of Japan's (BoJ) rate-hike plans. Moreover, the concerns over the impact of potential trade tariffs from US President-elect Donald Trump on the Japanese economy are adding to the pressure on the yen.
In addition to this, there are concerns that Japan's government might step in to stop the yen from falling too much. However, given Japan's current economic challenges and the market situation, the USD/JPY pair is likely to keep rising. This is because the Bank of Japan is having a hard time deciding when to raise interest rates.
US Dollar Strengthens on Inflation Expectations and High Treasury Yields, Supporting USD/JPY
On the other hand, the US dollar is benefiting from expectations that the new US administration's policies will stimulate inflation, possibly causing the Federal Reserve to pause its interest rate cuts.
Furthermore, the US Consumer Price Index (CPI) data released on Wednesday showed slower progress in bringing inflation down, which may lead to fewer interest rate cuts next year.
This has kept US Treasury bond yields high, supporting the US dollar. On the data front, the October US Consumer Price Index (CPI) rose by 2.6% year-over-year, while the core CPI, excluding food and energy, increased by 3.3%, both matching forecasts.
Therefore, the strong US dollar, supported by expectations of inflation-driven policies and high Treasury yields, boosts the USD/JPY pair. The October US CPI data, showing a 2.6% annual rise and 3.3% core increase, reinforces the bullish outlook for the USD/JPY.
USD/JPY – Technical Analysis
The USD/JPY pair is showing strong bullish momentum, currently trading around 155.87. The recent move upwards has been supported by a breakout past the 1.618 Fibonacci extension at 156.32, which now serves as a key level to watch.
The next significant resistance levels are at 157.31 and 158.01. A break above these could indicate further upward momentum, especially if the broader dollar strength persists.
On the support side, immediate levels to monitor are 155.43, followed by 154.50 and 154.18. The 50-period EMA at 153.58 continues to underline the bullish trend, as the price remains well above this indicator, suggesting sustained buying pressure.
The RSI sits at 69.44, nearing overbought territory, signaling that a short-term pullback could occur. However, as long as the price stays above the pivot at 155.43, the bullish outlook is likely to remain intact.
Given the technical landscape, a potential entry at 155.43 with a target around 156.71 appears favorable, aligning with the recent bullish trend. Caution is warranted near the overbought RSI, as a correction might bring prices back toward the immediate support zones.
The USD/JPY remains bullish above 155.43, with targets near 156.71. Overbought RSI suggests a watchful eye on potential pullbacks, though upward momentum is favored.
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