Market analysis: USD/JPY treads carefully as intervention spooks investors.

The advances in USD/JPY remain shy. The pair has plateaued in recent sessions with little deviation from the current level of 156.90 as the lack of direction becomes evident. The momentum remains bullish, but buyers are sceptic of how much more room there is to move higher before Japanese officials intervene in markets again. Last month the bullish drive was much stronger, but it ended abruptly at the 160 mark as speculation of FX intervention arose. Despite a recovery throughout May, the mood remains slightly gloomy for USD/JPY.

USD/JPY daily chart

Past performance is not a reliable indicator of future results.

As data continued to support the Fed’s higher-for-longer stance the US dollar remains favoured versus the Japanese yen. That said, investors are starting to doubt how much longer this setup can go on, leading to a selloff in the dollar in the past few days. It is unlikely that the bias in USD/JPY will change over the coming weeks unless we see a deviation from the Federal Reserve from its current hawkish stance or any indication that the Bank of Japan is willing to hike interest rates once again. Either of these scenarios seems highly unlikely in the short-term which suggests the path of least resistance for USD/JPY will remain higher.

However, traders will need to overcome the technical barriers that are limiting the upside. There aren’t specific levels of resistance as such, but more so a level of distrust and uncertainty about how much further the momentum can go before being halted. It seems like for now, slow and steady wins the race, meaning we may continue to see small daily gains building on each other and testing the waters for continued appetite to move higher.


Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

The information provided is not to be considered investment advice or investment research. Capital.com will not be liable for any losses from the use of the information provided.'