USD/JPY Volatility Increases Amid End-of-Fiscal Year Turmoil and Uncertainty

Key Takeaways

• Yen unstable ahead of end of Japanese fiscal year
• Global risk sentiment lowers Yen’s safe-haven status
• USD/JPY traders watching US Treasury yields and economic data

Overview

The Dollar/Yen is trading weaker on Thursday after posting significant gains the previous session.

At 08:26 GMT, the USD/JPY is at 132.467, down 0.402 or -0.30%. On Wednesday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXE) settled at $70.13, down $1.08 or -1.52%.

The Japanese fiscal year is scheduled to end on Friday, which is causing uncertainty and instability this week in the Yen’s value. As a result, the Dollar/Yen’s exchange rate has been fluctuating, and it’s challenging to predict its value accurately.

Furthermore, as global risk sentiment improves, the Yen is becoming less attractive as a traditional safe haven.

Investors Watch U.S. Treasury Yields and Economic Data Amid Market Turmoil, Fed Uncertainty

USD/JPY traders are closely monitoring U.S. Treasury yields, key economic data, and Fed speakers’ remarks.

On Thursday, U.S. Treasury yields remained mostly unchanged as investors awaited economic data that could provide insights into the economy and inflation outlook.

Market turbulence from the banking sector’s recent collapse has subsided, leading investors to evaluate the state of the economy and how it may impact interest rate policy.

Despite the Fed signaling that rate hikes could be paused earlier than anticipated, officials have emphasized that they are still combatting inflation.

Today, investors are keeping a close eye on remarks from several Fed speakers and eagerly awaiting the release of U.S. initial jobless claims data and U.S. gross domestic product figures at 12:30 GMT. On Friday, the personal consumption expenditures price index, which is one of the Fed’s preferred inflation measures, will also be released.

Daily USD/JPY Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher.

A trade through 129.641 will signal a resumption of the downtrend. The main trend will change to up when buyers take out 137.911.

The main range is 127.227 to 137.911. The USD/JPY is currently trading on the strong side of its retracement zone at 132.569 to 131.308, making it support.

The short-term range is 137.911 to 129.641. Its retracement zone at 133.776 to 134.752 is the next upside target and potential resistance.

Daily USD/JPY Technical Forecast

Trader reaction to the main 50% level at 132.569 is likely to determine the direction of the USD/JPY on Thursday.

Bullish Scenario

A sustained move over 132.569 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into 133.776 – 134.752. Sellers could come in on a test of this area.

Bearish Scenario

A sustained move under 132.569 will signal the presence of sellers. If this generates enough downside momentum then be prepared for a possible plunge into 131.308 – 130.881. Sellers could come in on a test of this zone.