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USDJPY Market Update

9/5/2022 12:46 PM

The US dollar shows weak growth, holding above the psychological level of 140.00, while the yen continues its rapid fall, reaching its 1998 lows. Since the beginning of this year, the Japanese currency has lost more than 20% in value against the background of the ultra-soft monetary policy of the country's main financial regulator.

Despite the July inflation, which reached a record high of 2.4% over the past seven years, the Bank of Japan decided to maintain current parameters, leaving the interest rate at a negative level of –0.1%. Accordingly, in conditions when the regulator unlimitedly buys government bonds from investors, there is a motivation to transfer capital into dollars with a higher yield.

American statistics, in turn, reflected a stable state of the national economy, which will allow the US Fed to maintain an aggressive approach in raising interest rates to combat inflation, which has reached forty-year highs. Published on Friday, the August report on the US labor market reflected an increase in Nonfarm Payrolls by another 315.0 thousand after an increase of 526.0 thousand a month earlier; however, statistics also recorded acceleration in the Unemployment Rate from 3.5% to 3.7% with a neutral forecast of analysts.

The yen is now slightly supported by statistics from Japan: Jibun Bank Manufacturing PMI strengthened from 49.2 points to 49.5 points in August, while experts did not expect any changes at all.


Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, pointing at the ambiguous nature of trading in the ultra-short term. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic, having reached its highs is reversing into a descending plane, indicating overbought USD in the ultra-short term.

Resistance levels: 140.78, 141.50, 142.50, 143.50. | Support levels: 139.67, 138.50, 137.50, 136.50.




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