- Summary:
- USDJPY has recently been on an upward trajectory with help from BoJ Deputy Governor's dovish comments, but the momentum has run out of steam.
USDJPY traded flat on Friday, as the market seemed to have locked in recent dovish comments by BoJ Deputy Governor, Shinichi Uchida. The currency pair was unchanged at 147.18 at the time of writing, pausing a three-session rising streak. In his comments on Wednesday, Uchida said that recent volatility in the global financial markets calls on the central bank to exercise caution in raising interest rates. He added that as a result, the BoJ had seen it necessary to maintain the current interest rates “for the time being.”
Uchida’s comments mean that the next rate hike probably won’t come until 2025. That puts a lid on the yen’s recent upward momentum, triggered by the BoJ’s decision to raise lending rates to 0.25 percent from the previous 0-0.1 percent range. That said, the dollar’s gains will also be subdued by the Fed’s impending interest rate cuts starting September.
Momentum indicators
On the 2-hour chart, USDJPY is floating above the middle Bollinger Band, signaling control by the buyers. Notably, the price has broken below the psychological mark at $147.00, making that mark a potential support level in the near-term. Meanwhile, the Relative Strength Index (RSI) is at 56, which is also supportive of the bullish control.
USDJPY support and resistance levels
The USDJPY pair looks to continue with the uptrend as shown by the Relative Strength Index (RSI) on the chart below, if the buyers keep the exchange rate above the 147.00 pivot mark. That will likely see the first resistance at 147.30. However, prolonged control by the buyers will break above that mark and build the momentum to test 147.50. On the other hand, the sellers could take control if the pair breaks below 147.00. If that happens, the first support could come at 146.80. However, extended control by the buyers will breach that support, invalidating the upside view. Furthermore, it could propel the downside momentum to test 146.60.
