Hello Traders,
The USDJPY which has been in an overall uptrend cycle since 16.09.2024 has been showing recently signs of a potential rally exhaustion and sending a small warning to the bulls. Today Bank Of Japan’s Governor Kazuo Ueda mentioned that the central bank will take seriously into account FX moves in adjusting it’s economic and price forecasts. We have seen in the past how at certain moments where the YEN has been weakening in extreme levels the intervention from BOJ trying to rebalance the FX rates.
On monetary policy, Ueda commented that the BOJ has a meeting to meeting approach looking at the economic data in determining whether they should raise rates further or maintain it’s current 0.25% rate basis. The next meeting will be held next month on the 19th of December. The weak yen, from one benefits export which had pushed up import costs and inflation – was among the factors that led to the BOJ’s decision to raise interest rates in July.
USDJPY Technical Outlook
We can see that within the 8H chart there is a weakening of the RSI in terms of the momentum as well as the price is struggling to extend higher withing a wedge channel. This might be a warning to the bulls and a potential reaction might soon be taking place as far as the the pairs stays below the 156 area. If the wedge breaks down then the pair might be looking to dip lower near the 150 area. Buyers should be careful with chasing the pair higher as the potential risks of a move lower are greater vs any potential upside near term.
It would be important to note that December’s BOJ meeting might be key in terms of determining the future path for monetary policy and near term the pair might be experiencing periods of higher volatility as the uptrend gets exhausted and loses momentum.
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