USD/JPY commences the week at approximately 157.48. The Japanese yen appreciated for three consecutive sessions last week following the Bank of Japan’s decision to maintain its key interest rate at 1.25%, in line with expectations. Simultaneously, the BoJ conveyed a significant indication regarding forthcoming policy: the central bank has announced that core inflation has ultimately attained the 2% target. This has bolstered anticipations that the subsequent action may be a rate increase as soon as December. The decision received approval through an 8-1 vote. Board member Hajime Takata advocated for an immediate increase in the rate to 1.5%, emphasising that economic conditions have transitioned into a new phase, necessitating a more rapid approach toward achieving a neutral rate. The yen gained support from heightened demand for safe-haven assets following disappointing reports from major technology companies. These reports once more heightened apprehensions regarding the magnitude of AI investment and instigated another sell-off in the stock market.
Another positive factor for the yen was the resurgence of global asset managers in the Japanese debt market. Enhancements in domestic demand coupled with more favourable expectations regarding monetary policy are elevating the attractiveness of higher Japanese bond yields and bolstering the yen. On the four-hour chart, USD/JPY persists in establishing an upward corrective structure following the completion of its decline to 156.07. Buyers have driven the price back up to 157.98; however, the downward resistance line constrains any potential for further appreciation. Early in the day, a local correction toward 157.38 is anticipated, followed by a continuation of growth. The immediate target is 158.08, with a break above this level opening the way toward 159.16. The primary medium-term objective is positioned at 160.08. The MACD indicator indicates a decline in upward momentum: the histogram is narrowing, and the signal line is progressively descending. This permits a preliminary downturn prior to the resumption of growth.
On the hourly USD/JPY chart, a local peak has emerged at 157.98, indicating the onset of a corrective move from this level. The current pattern suggests a decline into the 157.46-157.38 area, where the nearest support zone is located. The price maintaining its position above 157.14 would permit the correction to be interpreted as a transitional phase in the development of a new upward wave. Following the conclusion of the pullback, a rebound toward 158.08 is anticipated, succeeded by a progression toward 158.63 and 159.16. The Stochastic oscillator has exited the overbought territory and is trending downward, indicating a probable short-term correction is on the horizon. The primary outlook for Monday anticipates that the decline will conclude near 157.38, subsequently leading to a rebound in growth. A move above 158.08 would enhance the prospects for further upward momentum. A break below support at 157.14 would undermine this scenario and pave the way toward 156.07.
USD/JPY remains under pressure as the yen benefits from the Bank of Japan’s signal that core inflation has reached its 2% target, keeping a December rate hike firmly in play. The 8-1 vote, with one member advocating for an immediate increase to 1.5%, highlights the increasing hawkish sentiment within the BoJ. Additional support for the yen is derived from safe-haven demand in light of weakness in the tech sector and the renewed interest of global investors in Japanese bonds. Technically, the pair is situated in a corrective phase within a more extensive upward structure, with support levels identified at 157.38 and 157.14, while resistance is noted at 158.08. A break above 158.08 would pave the way toward 158.63, 159.16, and ultimately 160.08, whereas a break below 157.14 would reveal 156.07. The near-term direction will depend on whether the current correction sustains or intensifies.
