USD/JPY recovered recently, reaching 149.77, following a rise in the USD. Factors influencing this movement include US policies on Chinese investments and trade agreements with Canada and Mexico.
Current daily momentum suggests a bearish trend, but with some potential for short-term rebounds. Support levels are identified at 149.20, 148.80, and 147, while resistance points lie at 150.50 and 151.50.
Further narrowing of UST-JGB yield differentials may influence downward movement. Bank of Japan Governor Ueda indicated that yields correspond to economic recovery, suggesting a potential rate increase if conditions improve.
This recent rebound to 149.77 signals that the dollar has found enough buyers to slow down any deeper pullback, at least for now. The strength of the currency appears to be tied to decisions coming from Washington, particularly those affecting China and trade relationships closer to home. Given the way things are unfolding, it’s becoming increasingly clear that political shifts are setting the tone for the market’s direction.
Despite regaining some ground, the broader downtrend remains visible on daily charts. There are signs of short-lived recoveries, but momentum still leans towards sellers. This suggests that while price spikes are possible, they might not hold for long. The levels marking potential areas of support sit at 149.20, 148.80, and 147. If prices slip lower, these are the points to watch for a possible pause or bounce. On the other side, resistance remains firm at 150.50 and 151.50, meaning any upswing will need strong momentum to break through.
Shifts in bond yields could also come into play. If US Treasury yields lose their advantage over Japanese government bonds, downward movement may pick up. Governor Kazuo spoke on this recently, pointing out that yield levels align with economic progress. His words leave room for the possibility that an interest rate hike could be on the table should conditions justify it. For traders mapping out the weeks ahead, attention to these shifts will be necessary.
