USD/JPY Price Forecast: Tests 157.00 support after slipping below nine-day EMA
- USD/JPY could find the immediate barrier at the nine-day EMA of 157.22.
- The 14-day Relative Strength Index of 49 near the neutral band signals temporary consolidation.
- The primary support lies at the symmetrical triangle bottom around 155.60.
USD/JPY loses ground for the second successive day, trading around 157.10 during the Asian hours on Wednesday. The currency pair is moving sideways within a symmetrical triangle, which indicates a consolidation phase where buyers and sellers are in temporary equilibrium, pointing to an impending volatility expansion once price breaks out above resistance or below support.
The USD/JPY pair is keeping a bearish near-term tone as it holds below both the nine-period and 50-period Exponential Moving Averages (EMAs). The alignment of price under these short- and medium-term EMAs suggests upside attempts remain capped, even as the 14-period Relative Strength Index (RSI) sits near the neutral band around 49, hinting at consolidation rather than a decisive trend reversal.
The USD/JPY pair could test the immediate barrier at the nine-day EMA of 157.22, followed by the 50-day EMA of 157.98. Further resistance lies at the upper boundary of the symmetrical triangle around 158.80. A successful break above the triangle would cause a bullish revival and support the pair to explore the region around a nearly 40-year high of 163.99, which was reached on July 23.
On the downside, the USD/JPY pair may target the lower boundary of the symmetrical triangle around 155.60. A successful break below the triangle would put downward pressure on the pair to test the 11-month low of 152.10.
Japan signals readiness to step in as Yen support message intensifies
Analysts at MUFG/BTMU highlight that the latest rhetoric from policymakers reinforces the sense of growing resolve in Tokyo, noting that "overall, the comments from Japanese officials at the start of this week continue to send a strong signal that Japan is prepared to intervene against to support the yen." They argue that the consistency and tone of official remarks underscore a clear willingness to act if currency weakness becomes excessive.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
What key factors drive the Japanese Yen?
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
How do the decisions of the Bank of Japan impact the Japanese Yen?
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
How does the differential between Japanese and US bond yields impact the Japanese Yen?
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
How does broader risk sentiment impact the Japanese Yen?
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.