Technical Analysis

USD/JPY Price Analysis – March 28, 2024

By LonghornFX Technical Analysis
Mar 28, 20243 min

Daily Price Outlook

The USD/JPY currency pair maintained it upward trend and remained well bid around 151.50 level. However, the reason for its upward trend can be attributed to the hawkish stance of the Federal Reserve, particularly highlighted by comments made by Fed Governor Christopher Waller. Waller's remarks indicated a less dovish outlook on monetary policy, citing higher-than-expected inflation readings and the resilience of the US economy. This has led to increased expectations of a more aggressive stance on interest rates, which typically strengthens the US dollar and supports the USD/JPY pair.

Furthermore, the upcoming US macroeconomic data, including the final Q4 GDP print and the Weekly Initial Jobless Claims, are being closely monitored by traders for any signs of economic strength or weakness.

BoJ’s Dovish Outlook and Its Impact on USD/JPY Currency Pair:

Conversely, the Bank of Japan's dovish outlook has exerted downward pressure on the Japanese yen and contributed to the strength of the USD/JPY currency pair. Japanese monetary officials have expressed a cautious approach to monetary policy, signaling their readiness to maintain accommodative financial conditions for an extended period.

Therefore, the dovish stance of the Bank of Japan contrasts with the hawkish sentiment of the Federal Reserve, widening the interest rate differential between the US dollar and the Japanese yen. Furthermore, Japanese authorities have hinted at potential interventions to address disorderly movements in the currency market, which may further weaken the Japanese yen relative to the US dollar.

Impact of Federal Reserve's Stance on AUD/USD Pair

On the US front, Federal Reserve Board Governor Christopher Waller's stance favoring higher interest rates boosted the US dollar and impacted the AUD/USD pair. Despite steady inflation, Waller signaled a reluctance to lower rates hastily. This cautious approach hinted that the Fed might delay easing monetary policy, supporting the US dollar and causing the AUD/USD pair to fall.

Additionally, other Fed members like Bostic and Cook warned that cutting rates too soon could worsen inflation, while Goolsbee from the Chicago Fed leaned towards rate cuts but wanted proof of improving inflation first.

Therefore, the AUD/USD pair weakened as Federal Reserve officials, including Waller, signaled reluctance to lower rates promptly, boosting the US dollar amid concerns about inflation and delaying monetary easing.

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

USD/JPY - Technical Analysis

In the latest trading session, the USD/JPY pair inched slightly upwards by 0.03%, positioning itself at 151.354. This subtle movement underscores a cautious optimism among traders, hinting at potential bullish momentum for the pair. With the pivot point firmly established at 151.02, USD/JPY finds itself at a crossroads, where any shift above this level could pave the way for a further ascent.

Immediate resistance markers are set at 151.97, 152.59, and 153.17, delineating clear targets for bullish traders. Conversely, support levels at 150.30, 149.74, and 148.95 offer a safety net, should the pair experience a downturn. The alignment of the 50-day Exponential Moving Average (EMA) at 151.03 with the pivot point reinforces the bullish outlook, serving as a testament to the underlying buying pressure.

Moreover, the Relative Strength Index (RSI) hovering around 52 suggests a neutral to slightly bullish sentiment, providing additional confirmation of the potential for upward movement. This combination of technical indicators points towards a favorable environment for buyers, especially if the pair successfully breaches the pivot point.

In summary, the technical landscape for USD/JPY appears bullish above the pivotal 151.02 mark. Traders might consider entering a long position above this threshold, targeting a rise towards 152.283, while employing a stop loss at 150.423 to mitigate potential risks.

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