USD/JPY Outlook

Yen remains stable around these levels and in my opinion, there will be a temporary relief but due to interest rate differentials, volatility will remain the same. Based on government statements, I can say that JPY is weakening against dollar, so I’ll take positions according to this.

Can you elaborate more on what is the interest rate differentials are influencing volatility?

Despite the temporary gains after BoJ meeting, bearish sentiment on the Yen prevailed. Fed Rate cut expectations gave dollar an edge but still the picture is unclear. US inflation data next week may reinforce the dollar’s strength within a 155-160 Yen range.

With Japanese government bond yields surging, USD/JPY is likely to see increased volatility. Hawkish signals could push the pair higher. Yet, collaboration between the government and BOJ might mitigate yen’s downside. Short-term remains bullish with potentiak resisyance around 115 levels.

Important Levels

The BoJ announced that it continues its bond purchases, which caused the USDJPY pair to move against the Yen during the Asian session. After seeing the level of 153.70 earlier in the week, the pair starts the last trading day of the week at the level of 155.85.

The first intraday support level is 155.55, while the main support can be followed at the level of 154.80.

In case of possible upward movement, the main intraday resistance is at the level of 156.75.

As of yesterday, the parity had retraced to 157.10, which is the 61.8% Fibonacci retracement of the 160.2/151.9 decline. Today, it continues to trade in this resistance area. Movements above 157.10 could initially drive the price up to 158.4, favoring the dollar.

The exchange started the new week with a slight movement in favor of the Yen. Last week, it tested the 157.10 resistance but failed to break upwards. The 157.10 level proved to be an important resistance line because it corresponds to the 61.8 Fibonacci retracement of the 160.20/151.90 decline that occurred in Late April and early May. During the day, the 156.75 level will be watched as an intermediate support and 156.05 as the main support.