The USDJPY pair is recovering on Thursday as the Japanese yen corrects after overnight losses amid verbal intervention from Japanese authorities who have spoken out about excessive currency fluctuations. Japan’s Cabinet Secretary General Hayashi Yoshimasa and Vice Minister of Finance Atsushi Mimura said the government is ready to take measures to stabilize the currency market if needed. However, the Bank of Japan’s hesitancy to tighten monetary policy and global uncertainty limit the potential for yen appreciation.
Investors’ attention is also focused on today’s Fed interest rate decision. Traders expect a 25 basis point cut in the U.S. following the meeting. They will also keep an eye on Chairman Jerome Powell’s statements regarding future rate plans.
On the other hand, the U.S. dollar is supported by high U.S. Treasury yields, which reached 4.45% — the highest level since July. This came amid expectations of rising inflation and slowing rate cuts under Donald Trump’s presidency. High yields support interest in the dollar as a higher-yielding asset, creating additional pressure on the yen.
The minutes of the Bank of Japan’s September meeting showed a cautious approach to rate hikes due to global economic uncertainty. However, given the growing yield gap between the US and Japan, the USDJPY pair is likely to maintain its upward momentum as long as the dollar remains attractive to investors.
From the technical point of view, USDJPY is forming an uptrend on the H4 timeframe. Bulls Power and Bears Power are approaching zero, confirming the current correction of the pair.
Signal:
The short-term outlook for the USDJPY currency pair is to buy.
The target is at the level of 156.80.
Part of the profit should be fixed near the level of 154.80.
The Stop loss could be placed at the level of 151.80.
The bullish trend is of a short-term nature, so it’s suggested to limit the trading volume to no more than 2% of your capital.
