- The USD/JPY pair continues to trade sideways in the 149.00 – 150.00 range, with investors awaiting new catalysts.
- U.S. Retail Sales for September will be released on Tuesday.
- The prospects of the BOJ intervening in the markets to curb the depreciation of the yen could limit the upside potential.
- The Fed’s dovish speech is gaining relevance and limits the USD’s bullish potential.
On Monday, the USD/JPY pair traded with slight gains above 149.50, driven mainly by the weakness of the Yen. Likewise, the Dollar is performing poorly against its rivals, while the DXY index consolidates last week’s gains after surpassing 106.00.
US retail sales figures for September will provide markets with additional data on the US economy to continue placing bets on the Federal Reserve’s (Fed) next moves. Meanwhile, according to the World Interest Rate Probabilities (WIRP), tightening expectations are low, mainly driven by the Fed doves, which refrained from committing to another hike over the past week, but the US remains without showing signs of cooling that would push the Fed to raise more times in this tightening cycle.
Along these lines, Thomas Harker was moderate on Monday and reiterated that the Fed “probably” has ended rate hikes. On Tuesday and Wednesday, Michelle Bowman, Christopher Waller and John Williams, among others, will deliver dovish speeches, which could increase selling pressure on the green currency.
On the other hand, the Bank of Japan (BOJ) maintains a dovish stance and the markets foresee a takeoff in 2024, so the divergences in monetary policy between its counterparts make the yen vulnerable. On the positive side, investors expect the bank to intervene to curb the yen’s depreciation, which could limit the pair’s upside potential.
Levels to watch in USD/JPY
On the daily chart, the USD/JPY pair presents a neutral to bearish technical picture as the bullish momentum weakens. The Relative Strength Index (RSI) has turned flat above its midline, while the Moving Average Convergence (MACD) shows stagnant red bars. Furthermore, the pair is above the 20,100,200-day SMA, highlighting the continued dominance of the bulls on a larger scale.
support levels: 149.00 (20-day SMA), 148.00, 147.30.
Resistance levels: 150.00, 150.50, 151.00.
USD/JPY Daily Chart
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
