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USD/JPY Technical Analysis: Continued Tightening


While attempting to recover, the price of the currency pair USD/JPY stabilized around the resistance level of 130.55. The currency pair has been affected a lot in the recent period by the signals of the central banks. This is where the change in the policy of the Japanese central bank to tighten as the other global central bank is tightening at the same time has calmed the expectations regarding the raising of the American interest rate. At the beginning of this week’s trading, the USD/JPY currency pair fell to the support level of 129.20 amid reports of pressure on the Japanese central bank to continue tightening.

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The US Federal Reserve Bank is preparing this week to raise the benchmark interest rate for the eighth time since March. But the Fed is likely to announce a smaller hike for the second time in a row and may change some key wording in its post-meeting statement about future rate hikes. The change in his statement, if there is a change, could be seen as signaling a final halt to the US Federal Reserve’s strong drive to raise borrowing costs. US Federal Reserve Chairman Jerome Powell is still likely to confirm, however, that the Fed’s campaign to beat high inflation is far from over.

When its final meeting ends on Wednesday, the 19-member policymaking committee is expected to raise the key short-term interest rate, which affects many business and consumer loans, by a quarter of a point. Doing so would raise the rate to a range of 4.5% to 4.75%, a 15-year high. It will be followed by the Federal Reserve’s move to raise the US interest rate by half a point in December and four hikes by three-quarters of a point before that.

The big increases in US interest rates last year reflected near-unanimous agreement among Fed officials that they needed to move quickly to raise borrowing costs to calm the worst run of inflation in more than 40 years. But with signs of weak economic growth along with steadily lower inflation readings, lower consumer spending, and even some signs of a slowdown in the labor market, the US Federal Reserve is now moving into more dangerous territory.

The lower spending and employment can help reduce inflation even more. But many Wall Street economists and investors worry that the Federal Reserve will raise US interest rates to very high levels – and keep them there for a long time – causing a deep recession in the process. Based on their public statements, policymakers insist that if they don’t continue to fight inflation with tighter credit, price rises could accelerate again and require more painful measures to calm them. With uncertainty rising, many officials said they would prefer to raise U.S. interest rates less, to allow time to assess the impact of their policies.

Expectations of the dollar against the Japanese yen today:

  • According to the performance on the graph for today’s time frame, the attempts of the pair of the US dollar against the Japanese yen USD/JPY did not amount to the upward change.
  • I see that this will happen in that time period if the bulls move in the currency pair towards the resistance levels 132.50 and 133.90 respectively.
  • On the other hand, the move towards the 128.95 support level will be important for the continuation of the strength of the downward trend.
  • At the same time moves the technical indicators towards oversold levels.

 I still prefer to buy the dollar/yen from every bearish level. The dollar/yen currency pair will be affected by the announcement of the monetary policy decisions of the American Federal Reserve Bank and the statements of the governor of the bank, Jerome Powell.

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