Technical Analysis

USD/JPY Price Analysis – April 18, 2024

By LonghornFX Technical Analysis
Apr 18, 20243 min

Daily Price Outlook

During Thursday's European session, the USD/JPY currency pair has sustained an upward trend, demonstrating recent bullish performance as investors show a preference for the US Dollar over the Japanese Yen. This trend is influenced by various factors, including economic indicators and market sentiment. Investors' confidence in the US economy has notably impacted the bullish performance of the USD/JPY pair. Simultaneously, the US economy's resilience amid global economic challenges has led investors to favor the US Dollar as a safe-haven currency.

Additionally, the Federal Reserve's commitment to maintaining higher interest rates for an extended period has increased the appeal of the US Dollar, resulting in heightened demand for USD-denominated assets and further strengthening the bullish stance of the USD/JPY pair.

Japan's Potential FX Intervention and Its Impact on USD/JPY Stability

On the JPY front, investors are increasingly worried about Japan's potential intervention in the FX market to bolster the Japanese Yen. This intervention is seen as a short-term tactic to halt the Yen's decline. Masato Kanda, Japan's Vice Finance Minister for International Affairs, indicated that authorities are open to various strategies to address significant Yen fluctuations.

This announcement has made market players anxious about how this intervention might affect the USD/JPY pair. The uncertainty stems from questions about the intervention's effectiveness, duration, and the ensuing volatility it could bring to currency trading strategies and risk management practices.

Therefore, the potential intervention by Japan to support the Japanese Yen has caused uncertainty and anxiety among market players regarding its impact on the USD/JPY pair's stability and volatility.

Strong US Retail Sales Data Supports USD and Delays Fed Rate Cut Speculations

On the USD front, the previously rleeased strong Retail Sales data indicated a robust US economy. This led to speculation that the Federal Reserve (Fed) might postpone its plans to ease monetary policy this year. Fed Chair Jerome Powell mentioned a willingness to delay rate cuts due to unexpectedly higher inflation readings. The central bank intends to wait until it's more confident that inflation will reach the 2% target before considering lowering borrowing rates. This stance supports the US dollar and contributed to the USD/JPY gains.

Therefore, the strong Retail Sales data and Fed's willingness to delay rate cuts due to higher inflation have boosted confidence in the US economy, supporting the USD and contributing to gains in the USD/JPY pair.

USD/JPY Price Chart - Source: Tradingview
USD/JPY Price Chart - Source: Tradingview

USD/JPY - Technical Analysis

The USD/JPY pair has slightly retreated today, recording a marginal decrease of 0.09%, and is currently priced at ¥154.284. Despite this slight downtick, the pair hovers above critical technical levels that could dictate short-term movements.

The pivot point for today stands at ¥153.93, acting as a baseline for the session's trading dynamics. If the pair maintains above this level, it could attempt to reach the immediate resistance at ¥154.75, followed by higher resistance levels at ¥155.36 and ¥155.99, which could serve as significant barriers to further upward movement. Conversely, support lies at ¥153.41, with additional levels at ¥152.81 and ¥151.95, where dips might find a floor, preventing deeper losses.

The Relative Strength Index (RSI) is at 58, suggesting a somewhat bullish sentiment but nearing the overbought territory, which might limit the potential for significant upside gains. The 50-day Exponential Moving Average (EMA) is at ¥153.24, currently below the pair's price, indicating an underlying bullish trend in the medium term.

For traders looking to capitalize on current market conditions, a buying strategy above the pivot point at ¥153.950 is advisable, targeting a take profit level at ¥155.000, with a stop loss set at ¥153.400 to manage risks.

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