USD/JPY Price Analysis – Nov 21, 2024
Daily Price Outlook
During the European trading session, the USD/JPY pair struggled to reverse its downward trend, staying under pressure around 154.41 and hitting a low of 154.09.
The main driver behind this decline was the weakening US dollar, which lost momentum due to a positive shift in market sentiment.
However, the downtrend could be short-lived, as expectations grow that the Federal Reserve may take a less dovish stance in the coming months.
Moreover, the Japanese yen gained further strength as Bank of Japan Governor Kazuo Ueda refrained from commenting on immediate monetary policy but left the door open for a potential interest rate hike as early as next month.
This uncertainty, coupled with ongoing geopolitical tensions from the Russia-Ukraine conflict, continues to fuel demand for safe-haven assets like the yen, with fears of intervention playing a role. These factors together could keep the USD/JPY pair under pressure in the near term.
BoJ's Uncertainty and Geopolitical Risks Boost Safe-Haven Yen Demand
On the JPY front, Bank of Japan (BoJ) Governor Kazuo Ueda did not give any clear comments on the bank’s future monetary policy.
However, he did leave the door open for a possible interest rate hike as early as next month. This uncertainty about the BoJ's next move has kept investors on edge, especially since the central bank decides its policy based on the latest available data.
As a result, investors are now betting on a 50-50 chance that the BoJ will either raise rates by 25 basis points or keep them unchanged at its final policy meeting of the year on December 18-19. This has added to the pressure on the yen, with many seeing it as a safe-haven currency amid ongoing global risks.
In addition to the BoJ’s stance, persistent geopolitical tensions, particularly the worsening Russia-Ukraine conflict, are also supporting the yen. These risks make investors more likely to turn to safe-haven assets like the yen, increasing demand for the currency.
Meanwhile, reports suggest that Japan's government is considering an economic package worth ¥21.9 trillion to support the economy, which could have further effects on the yen's performance.
Therefore, the uncertainty around the Bank of Japan’s policy, along with ongoing geopolitical tensions, is likely to keep the yen in demand as a safe-haven currency. This could put further downward pressure on the USD/JPY pair, potentially pushing it lower.
USD/JPY – Technical Analysis
USD/JPY is trading at 155.08, down 0.22%, reflecting a modest pullback from recent highs. The pivot point at 155.86 is a critical level for bulls to reclaim in order to regain upward momentum.
Immediate resistance stands at 156.56, followed by 157.31, while on the downside, support is seen at 154.11, with additional levels at 153.29 and 152.62 offering a cushion against deeper declines.
The 50-day EMA, currently at 154.87, aligns closely with the pair’s immediate support, reinforcing the importance of the 154.11 level. The RSI at 48 indicates neutral momentum, leaving room for either consolidation or a potential directional breakout based on upcoming market catalysts.
A break above the pivot point of 155.86 would signal bullish momentum, targeting resistance at 156.56 and 157.31. Conversely, a drop below immediate support at 154.11 could increase bearish pressure toward 153.29.
Traders may consider an entry above 154.86, with a stop loss at 154.28 to mitigate downside risks. Profit targets can be set at 155.87 for a balanced risk-reward scenario.
In summary, USD/JPY is navigating a critical range, with near-term direction hinging on its ability to break above 155.86. Traders should monitor technical levels and market conditions closely for further cues.
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