CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

The US Dollar (USD) is likely to trade in a range, probably between 149.00 and 149.95. In the long run, although momentum has not increased much, further USD strength seems likely. Levels to watch are 150.05 and 151.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD probably to trade between 149.00 and 149.95

24-HOUR VIEW: “We expected USD to edge higher yesterday. However, we pointed out that ‘due to the mild momentum, any advance is likely limited to a test of 149.70, and the major resistance at 150.05 is unlikely to come into view.’ Our view of a higher USD was not wrong, even though it rose more than expected, reaching a high of 149.98. Despite the advance, there has been no significant increase in momentum. Today, instead of continuing to advance, USD is more likely to trade in a range, probably between 149.00 and 149.95.”

1-3 WEEKS VIEW: “We have been expecting a higher USD since early this month. In our most recent narrative from last Thursday (10 Oct, spot at 149.20), we highlighted that ‘although upward momentum has not increased much, further USD strength seems likely, and the levels to watch are at 150.05 and 151.00.’ While USD rose to 149.98 yesterday, upward momentum has not improved much. That said, as long as 148.40 (‘strong support’ level previously at 148.00) is not breached, there is still potential for USD to break above 150.05. At this time, the likelihood of USD rising to 151.00 is not high.”

• USD/JPY reaches a two-month high of 149.98 but faces resistance at the psychological 150.00 figure.
• Technical outlook remains upward biased, with bullish RSI signaling room for further gains before overbought conditions.
• A break above 150.00 could target resistance at the 100 and 200-day DMAs around 151.14-151.22, while a drop below 149.50 could prompt a retest of 149.00 and the October 8 low at 147.35.

The USD/JPY extended its gains throughout the North American session, up 0.42%, and trading at 149.75 at the time of writing. The pair hit a two-month high of 149.98, though buyers lacked the force to crack the 150.00 figure.

USD/JPY Price Forecast: Technical outlook

The USD/JPY daily chart is neutral to upward biased after clearing key support levels.

Momentum, as measured by the Relative Strength Index (RSI), is bullish, with enough room to spare before turning overbought.

If USD/JPY clears the 150.00 figure, this could pave the way for challenging the 100 and 200-day moving averages (DMAs) each at 151.14 and 151.22. On further strength, the next stop would be the top of the Ichimoku Cloud (Kumo) at 152.00.

Conversely, if USD/JPY falls beneath the 149.50 mark, this could sponsor a test of the 149.00 mark. A breach of the latter will expose the October 8 low of 147.35, ahead of the Tenkan-Sen at 146.70.

USD/JPY Price Action – Daily Chart

• USD/JPY continues rising in a short and probably medium-term trend higher. 
• It is overbought according to RSI, however, and could pull-back to support temporarily. 

USD/JPY has been steadily rising since the mid-September 140 lows. It is now in the 149s and appears to have established a short – and probably – medium-term uptrend. Given the premise that “the trend is your friend” the odds favor a continuation higher. 

USD/JPY 4-hour Chart 

The next target lies at 151.09 and the 200-day Simple Moving Average (SMA) (not shown), followed by the major trendline in the 151.80s. 

The pair is overbought, however, according to the Relative Strength Index (RSI) momentum indicator and this means long-holders should not add to their positions as there is a risk of a pull back. 

If RSI exists overbought it will signal a correction, probably to support at either 149.40 or 148.32 if deeper. 

The US Dollar (USD) is expected to edge higher; due to the mild momentum, any advance is likely limited to a test of 149.70. In the longer run, although momentum has not increased much; further USD strength seems likely. Levels to watch are 150.05 and 151.00, UOB Group’s FC analysts Quek Ser Leang and Lee Sue Ann note.

Levels to watch are 150.05 and 151.00

24-HOUR VIEW: “We indicated last Friday that USD ‘appears to have moved into a consolidation,’ and we expected it to trade in a 148.10//149.40 range. USD subsequently traded between 148.39 and 149.28, closing at 149.13 (+0.38%). There has been a slight increase upward momentum, and today, we expect USD to edge higher. Due to the mild momentum, any advance is likely limited to a test of 149.70. The major resistance at 150.05 is unlikely to come into view. Support is at 148.95; a breach of 148.60 would indicate that the current mild upward pressure has faded.”

1-3 WEEKS VIEW: “We have been expecting a higher USD since early this month (as annotated in the chart below). In our most recent narrative from last Thursday (10 Oct, spot at 149.20), we highlighted that ‘although upward momentum has not increased much, further USD strength seems likely, and the levels to watch are at 150.05 and 151.00.’ We continue to hold the same view provided that 148.00 (‘strong support’ level previously at 147.50) is not breached.”

USD/JPY has a downside bias if it consolidates in a 145-150 range, DBS’ FX analyst Philip Wee notes.

Ishiba has affirms the Bank of Japan’s independence

“Japan Prime Minister Shigeru Ishiba has affirmed the Bank of Japan’s independence, looking to correct his earlier remark in early October about opposing future interest rate hikes. Heading into the snap election on October 27, the Ishiba government probably realized the critical role played by the BOJ’s hikes in addressing the JPY’s weakness, which is responsible for the higher cost of living besetting voters.

"The next BOJ meeting is scheduled on October 31. During its next policy meeting on October 30-31, the BOJ should reaffirm its framework to hike rates and reduce JGB purchases if the economy performs according to its projections."

"On October 18, consensus sees National CPI inflation excluding fresh food falling to 2.3% YoY in September from 2.8% in August, below the BOJ’s median forecast of 2.5% for Fiscal 2024 but above the 2.1% projection for Fiscal 2025. The 2Y and 10Y bond differentials between USTs and JGBs suggest that USD/JPY should be lower around 138-141."

• USD/JPY trades on a stronger note near 149.20 in Monday’s Asian session. 
• The BoJ rate hike uncertainty continues to undermine the JPY, but geopolitical risks might cap its downside. 
• The US PPI supports the case for a Fed rate cut in November. 

The USD/JPY pair extends its upside to around 149.20 on Monday during the early Asian trading hours. The firmer US Dollar (USD) and uncertainty about the Bank of Japan’s stance on monetary policy provide some support to the pair. 

The doubts over how aggressive the BoJ would be in raising rates weigh on the Japanese Yen (JPY) against the USD. The BoJ ended negative interest rates in March and raised the short-term benchmark to 0.25% in July. The BoJ Governor Kazuo Ueda signaled the central bank's readiness to keep raising interest rates if economic and price developments move in line with its forecast. Nonetheless, uncertainty about Japanese Prime Minister Shigeru Ishiba's stance on monetary policy could complicate the decision to raise borrowing costs.

The ongoing geopolitical tensions in the Middle East might lift the safe-haven currency like the JPY and cap the upside for the pair. CNN reported on Sunday that at least four Israeli soldiers were killed and more than 60 people were injured by a drone attack in north-central Israel and Hezbollah has claimed responsibility for the attack.

The US Producer Price Index (PPI) data released on Friday points to a still-favorable inflation outlook and supports expectations of the Federal Reserve (Fed) rate cut next month. However, the prospect that the Fed will not cut rates as much as expected might underpin the Greenback.

Meanwhile, the USD Index (DXY), which tracks the USD against a basket of currencies, trades near the highest level since mid-August above the 103.00 psychological level. According to the CME FedWatch Tool, traders are pricing in roughly 88.6% odds that the Fed will cut the interest rate by 25 basis points (bps) in November.

• USD/JPY edges higher, trading within a range of 148.00-149.50 as US 10-year yields rise to 4.104%.
• Momentum favors buyers, with a break above 149.50, exposing the key 150.00 level and resistance at the 200/100-DMA confluence at 151.20/21.
• A drop below 149.00 could lead to a pullback toward the October 8 swing low of 147.35.

The USD/JPY edged higher during the North American session as US Treasury yields remained higher, particularly the 10-year T-note, which was up close to four basis points at 4.104%. The positive correlation between the US 10-year yield and the pair pushed the exchange rate to 149.13, up 0.37%.

USD/JPY Price Forecast: Technical outlook

The USD/JPY is still neutrally biased, though trading in a higher range within the 148.00-149.50 area, as traders decipher the Fed and the Bank of Japan's next move.

From a momentum standpoint, buyers remain in charge, yet the Relative Strength Index (RSI) hasn’t reached a new peak to push USD/JPY prices higher.

If USD/JPY clears the 149.50 area, this will immediately expose the 150.00 figure. Once removed, the next resistance would be the 200 and 100-day moving averages (DMAs) confluence at 151.20/21.

Conversely, if the pair drops below 149.00, look for a pullback toward the October 8 swing low of 147.35.

USD/JPY Price Action – Daily Chart

The US Dollar (USD) is likely to consolidate in a range of 148.10/149.40. In the longer run, although momentum has not increased much; further USD strength seems likely. Levels to watch are 150.05 and 151.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

USD can break above 149.40

24-HOUR VIEW: “Yesterday, we held the view that USD ‘is likely to rise above 149.50, but it does not seem to have enough momentum to break clearly above 150.05.’ However, the price action did not turn out as we expected. USD swung between 148.34 and 149.54 before closing at 148.56 (-0.49%). USD appears to have moved into a consolidation. Today, it is likely to trade in a 148.10//149.40 range.”

1-3 WEEKS VIEW: “We continue to hold the same view as yesterday (10 Oct, spot at 149.20). As indicated, although upward momentum has not increased much, further USD strength seems likely, and the levels to watch are at 150.05 and 151.00. To maintain the momentum, USD must not break below 147.50 (no change in ‘strong support’ level). Note that we have held a positive USD view since last week.”

So far this month, the USD is the best performing G10 currency by a clear margin. The JPY had a roller coaster of a summer, and shock waves are continuing to be felt. The rapid unwinding of the JPY funded carry trade followed the surprise decision by the BoJ to raise rates at its July policy meeting, Rabobank’s FX analyst Jane Foley notes.

Strong USD cad keep the JPY on the back foot near term

“In our view the broad direction of USD/JPY over the medium-term is likely to be lower. Behind the slow normalisation of the BoJ’s policy settings is an economy that is slowly shrugging off the mindset associated with decades of disinflation and deflationary pressures.”

“Optimism is already building that next spring will bring another set of strong wage deals for unionised workers which will help support consumption and the profitability of domestic firms. Changes in governance at the stock exchange and the government’s effort to promote investment are another part of the changing fundamental landscape in Japan, as are the government’s effort to establish the country’s position as a collaborator with the US in areas such as tech.

“While a strong USD could keep the JPY on the back foot near term, we would look to sell rallies into USD/JPY150.”

USD/JPY rebounded towards 149, and pulled back a bit afterword, DBS’ FX analyst Philip Wee notes.

Intervention does not appear to be an imminent risk

“USD/JPY had rebounded towards 149, with PM Ishiba dissolving the Lower House yesterday for elections on 27 October.” 

“New Japanese Finance Minister Kato had warned on Tuesday of the negative impact of sudden JPY moves, underscoring a discomfort with renewed JPY weakness.”

“With speculative positioning still not deeply short, intervention does not appear to be an imminent risk, and USD/JPY could remain sensitive to US rates for now.” 

The US Dollar (USD) is likely to rise above 149.50; it does not seem to have enough momentum to break clearly above 150.05. In the longer run, although momentum has not increased much; further USD strength seems likely. Levels to watch are 150.05 and 151.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Levels to watch are 150.05 and 151.00

24-HOUR VIEW: “We detected a “slightly firmed underlying tone” yesterday, and we expected USD to “trade in a higher range of 147.50/148.70.” However, USD rose and almost reached the major resistance at 149.40 (high has been 149.36). Today, as long as 148.50 (minor support is at 148.90) is not breached, USD is likely to rise above 149.50. At this time, it does not seem have enough momentum to break clearly above 150.05.”

1-3 WEEKS VIEW: “Our most recent narrative was from Monday (07 Oct, spot at 148.60), wherein USD “is expected to continue to rise, potentially breaking above 149.40.” Yesterday (Wednesday), USD rose to a high of 149.36. Although upward momentum has not increased much, further USD strength seems likely. Levels to watch above 149.50 are at 150.05 and 151.00. To maintain the momentum, USD must not break below 147.50 (‘strong support’ level previously at 146.40).”

• USD/JPY breaks key resistance, trading at 149.31, as high US yields and dovish PM comments support the pair.
• The Relative Strength Index (RSI) suggests room for further upside, with the August 15 high of 149.39 and 150.00 as the next targets.
• Key support lies at 147.35, with sellers aiming to push the pair below the Ichimoku Cloud at 146.40-60 and the Tenkan-Sen at 145.50.

The USD/JPY rallied and pushed above 149.00 for the first time since mid-August, sponsored by the jump in US Treasury yields due to their close positive correlation with the pair. This and dovish comments from incoming PM Ishiba sponsored a leg-up in the pair, which trades at 149.31.

USD/JPY Price Forecast: Technical outlook

The USD/JPY is neutral to upward biased after clearing key resistance levels like the 50-day moving average (DMA) and entering the Ichimoku Cloud (Kumo).

Momentum hints that buyers remain in charge via the Relative Strength Index (RSI). It should be said that the RSI is still far from being overbought, an indication that the pair could extend its gains.

If USD/JPY extends its gains above the August 15 high of 149.39, the 150.00 figure will be exposed. On further strength, the pair could challenge the 200-DMA at 151.39.

On the other hand, sellers will need to drive the USD/JPY below the latest cycle low according to the daily chart, being the October 8 low of 147.35. Once surpassed, the pair could challenge the bottom of the Kumo at 146.40-60, ahead of the Tenkan-Sen at 145.50.

USD/JPY Price Action – Daily Chart

• USD/JPY clings to gains near 149.00 with FOMC minutes on the horizon.
• The US core CPI is expected to have grown at a steady pace of 3.2% in September.
• The Japanese Yen will be influenced by the PPI data for September.

The USD/JPY pair remains firm near a seven-week high around 149.00 in Wednesday’s North American session. The asset exhibits strength ahead of the Federal Open Market Committee (FOMC) minutes for the September meeting, which will be published at 18:00 GMT.

In the policy meeting, the Fed reduced its key borrowing rates by 50 basis points (bps) to 4.75%-5.00%. This was the first dovish decision by the Fed in more than two-and-a-half years as officials were worried about deteriorating labor demand with increasing confidence that inflation would return sustainably to the bank’s target of 2%.

Meanwhile, the US Dollar (USD) performs strongly as market participants are not expecting the Fed to cut interest rates again by 50 bps in November. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, posts a fresh seven-week high near 102.80.

Investors will pay close attention to the FOMC minutes to get views of all officials about the likely interest rate action in the last quarter of the year. According to the CME FedWatch tool, traders have priced in two rate cuts of 25 bps in each of the remaining two meetings this year.

Going forward, the major trigger for the US Dollar will be the US Consumer Price Index (CPI) data for September, which will be published on Thursday. The core CPI -which excludes volatile food and energy prices – is estimated to have grown steadily by 3.2%.

On the Tokyo front, investors will focus on Japan’s Producer Price Index (PPI) data for September, which will be published on Thursday. Prices of goods and services at factory gates are estimated to have risen at a slower pace of 2.3% from 2.5% in August. Signs of producer inflation remaining persistent would prompt expectations of more hikes by the Bank of Japan (BoJ).

Further range trading appears likely, albeit in a higher range of 147.50/148.70. In the longer run, the US Dollar (USD) is expected to continue to rise, potentially breaking above 149.40, UOB Group Quek Ser Leang and Peter Chia note.

Can potentially break above 149.40

24-HOUR VIEW: “We highlighted yesterday that USD ‘appears to have entered a range trading phase,’ and we expected it to trade between 147.00 and 148.80. USD subsequently traded in a 147.33/148.37 range, closing largely unchanged at 148.19 (+0.01%). While further range trading appears likely, the slightly firmed underlying tone suggests a higher range of 147.50/148.70.”

1-3 WEEKS VIEW: “On Monday (07 Oct, spot at 148.60), we highlighted that USD ‘is expected to continue to rise, potentially breaking above 149.40.’ We added, ‘should USD break below 146.40 (‘strong support’ level), it would indicate that it is not rising further.’ Our view remains valid.”

• USD/JPY trades at 148.17 after hitting a low of 147.55, supported by buyers returning above the 148.00 level.
• Technical outlook suggests upside potential with resistance at 149.14, followed by 149.39 and 150.00.
• A drop below the Ichimoku Cloud at 146.60-80 could signal further downside for the pair.

The USD/JPY remains virtually unchanged after dropping to a two-day low of 147.55 amid hopes of a ceasefire between Hezbollah and Israel, as stated by Hezbollah’s prominent leader, according to CNN. At the time of writing, the pair trades at 148.17, flat.

USD/JPY Price Forecast: Technical outlook

Although the USD/JPY paused its uptrend, the pair resumed its advance.

The pair hit a weekly low of 147.34, but buyers moving in pushed the exchange rate above the 148.00 psychological figure, opening the door for further upside.

The Relative Strength Index (RSI) shows bulls in charge, even though it shows momentum paused.

For USD/JPY buyers to resume the uptrend, the first resistance will be the October 7 high at 149.14. A breach of the latter will expose the August 15 high of 149.39, followed by the 150.00 figure. Once those areas are surpassed, buyers will eye the 200-day moving average (DMA) at 151.13.

On the flip side, if USD/JPY drops below the Ichimoku Cloud (Kumo) at 146.60-80, this could pave the way for further downside.

USD/JPY Price Action – Daily Chart

• USD/JPY pares intraday losses and recovers above 148.00 amid firm US Dollar.
• Investors shift their focus to the US inflation data for September.
• A decline in Japan’s Overall Household Spending would diminish BoJ’s rate hike bets.

The USD/JPY recovers its intraday losses and returns to the day’s high of 148.20 in Tuesday’s North American session. The major gains as the US Dollar (USD) strives to extend its upside. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto gains near a seven-week high of 102.50.

The US Dollar’s performance has remained firm as market expectations for the Federal Reserve (Fed) to deliver another larger-than-usual interest rate cut of 50 basis points (bps) in November have waned.

According to the CME FedWatch tool, traders have repriced the Federal Fund rate for November and see a 25-bps rate cut that will push interest rates lower to 4.50%-4.75% after the release of the Nonfarm Payrolls (NFP) report for September. The employment data showed that the labor demand remained robust, the Unemployment Rate decelerated and the wage growth remained strong.

Going forward, investors will pay close attention to the US Consumer Price Index (CPI) data for September, which will be published on Thursday. Economists expect the core CPI – which excludes volatile food and energy prices – to have grown steadily by 3.2%. Annual headline inflation is expected to have decelerated further to 2.3% from 2.5% in August.

The impact of inflation is expected to be slight on Fed rate cut expectations as officials are more focused on reviving consumer spending and job growth.

On the Tokyo front, Overall household spending declined by 1.9% in August, slower than expectations of a 2.6% contraction. In July, the consumer spending measure grew by merely 0.1%. This is expected to diminish expectations of more rate hikes by the Bank of Japan (BoJ) in the last quarter of the year.

• USD/JPY retreats after failing to extend its rally, despite US 10-year Treasury yield rising five basis points.
• Technical outlook remains upward biased, with buyers eyeing a break above 149.14 and targeting 150.00 in the short term.
• A drop below 148.00 could see further downside, with key support at 147.00 and the bottom of the Ichimoku Cloud at 146.87.

The USD/JPY retreated after rallying for three straight days, even though the US 10-year Treasury noy yield rose five basis points. Risk aversion drives price action as the Middle East war escalates amid an exchange of fire between Israel, Hezbollah, and Hamas. At the time of writing, the pair trades at 148.12 after hitting a daily peak of 149.14.

USD/JPY Price Forecast: Technical outlook

The USD/JPY failed to extend its uptrend after piercing inside the Ichimoku Cloud (Kumo), which opened the door for further upside. Alongside that, the pair cleared the 50-day moving average (DMA) at 145.17, and since then, buyers have set their sights on 150.00.

Bullish momentum has faded, as shown by the Relative Strength Index (RSI) slope’s downward aiming. Still, the USD/JPY is upward biased in the short term.

 Given the backdrop, the USD/JPY first resistance will be the 149.14 daily high of October 7. Once surpassed, the next stop would be 150.00. If those levels are surrendered, bulls could challenge the 200-DMA at 151.09.

Conversely, if the pair drops below 148.00, bears can drag the exchange rate towards 147.00 as they would like to drive prices toward the latest key support, the bottom of Kumo at 146.87.

USD/JPY Price Action – Daily Chart

• USD/JPY decisively breaks above a critical level in a bullish sign.  
• It may also have completed a three-wave correction of the medium-term downtrend with more bearish implications. 

USD/JPY decisively pieces and closes above both its long-term trendline and key upside obstacle in the form of the 147.24 October 3 high. This lends credence to the bullish view and suggests a possible continuation of the short-term uptrend to a tentative target at the next key resistance level of 149.40, the August 15 high.  

USD/JPY Daily Chart 

Momentum is broadly bullish since the August bottom and the Moving Average Convergence Divergence (MACD) indicator has consistently converged with price during September, and is now in positive territory. 

A close above 149.40 would provide more confirmation of an extension of the short-term uptrend higher, with the next target potentially at 151.09 and the 200-day Simple Moving Average (SMA).

Yet bullish enthusiasm should be tempered by the possibility that USD/JPY may have formed a three-wave “abc” corrective pattern of the medium-term downtrend during July. If so, the pair may start to decline again as the longer-term bearish cycle starts to take hold. However, it is still too early to say with any confidence and price action itself is not evidencing any weakness yet.
 

A close below the 50-day SMA at 145.24 would probably indicate a resumption of the medium-term downtrend from the summer. Such a move would be expected to reach the wave B lows at around 141.72. 

Impulsive momentum indicates further US Dollar (USD) strength; overbought conditions suggest 149.40 is likely out of reach today. In the longer run, USD is expected to continue to rise, potentially breaking above 149.40, UOB Group FX analysts Quek Ser Leang and Peter Chia note.  

USD is expected to continue to rise

24-HOUR VIEW: “Our view for USD to trade in a range last Friday was incorrect. In NY trade, USD took off and surged to 149.00, closing on a strong note at 148.71 (+1.22%). The impulsive momentum indicates further USD strength, but severely overbought conditions suggest 149.40 is likely out of reach today. There is another resistance level at 149.00. To keep the momentum going, USD must not break below 147.50 with minor support at 148.10.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (03 Oct, spot at 146.55), wherein ‘the recent strong advance in USD has resulted in a boost in upward momentum’ and ‘this could lead to USD rising to 148.00.’ Last Friday, USD surged and reached 149.00. We continue to expect USD to rise, potentially breaking above 149.40. Looking ahead, the next resistance level of note above 149.40 is at 150.00. To maintain the momentum, USD must remain above 146.40 (‘strong support’ level previously at 144.80).”