USD/JPY Forex Technical Analysis – Edging Higher as Intervention Impact Diminishes

The Dollar/Yen is edging higher on Monday as U.S. Treasury yields rose, widening the spread with Japanese Government bonds. The Forex pair is still trading below levels it hit last week before Japanese authorities intervened, but most investors believe the impact of the move will eventually be absorbed.

At 11:46 GMT, the USD/JPY is trading 144.222, up 0.857 or +0.60%. On Friday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $65.20, down $0.47 or -0.72%.

The Japanese Yen has depreciated nearly 20% this year, sinking to 24-year lows, largely as aggressive U.S. interest rate hikes push the dollar higher.

Traders were expecting some intervention at some point, given the increasing verbal intervention from high ranking government and central bank officials. Additionally, two weeks ago, the Bank of Japan (BOE) conducted a rate check which is usually a precursor to an intervention.

Nonetheless, analysts are saying currency interventions are rarely successful with most expecting the move to provide a temporary reprieve for the Japanese Yen.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing. However, momentum has been trending lower since the intervention on September 22.

A trade through 145.900 will signal a resumption of the uptrend. A move through 131.734 will change the main trend to down.

The minor trend is down. This is controlling the momentum. A trade through the invention low at 140.353 will reaffirm the shift in momentum.

The minor range is 145.900 to 140.353. Its 50% level at 143.127 is support.

Another minor range is 135.809 to 145.900. Its 50% level at 140.855 essentially provided support after the intervention.

Daily Swing Chart Technical Forecast

Trader reaction to 143.127 is likely to determine the direction of the USD/JPY on Monday.

Bullish Scenario

A sustained move over 143.127 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into 145.900, followed by 146.780.

Bearish Scenario

A sustained move under 143.125 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into 140.855, followed by 140.353. This is a potential trigger point for an acceleration to the downside into 138.156.

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