The US Dollar is rising against the Japanese Yen, possibly marking its third consecutive day of gains. The Relative Strength Index is showing bullish signs, indicating a potential low around 142.00, which was seen in late May. The Bank of Japan has kept interest rates steady but is cautious about global trade uncertainties. After a brief strengthening, the Yen has been losing value since the decision was announced.

Market Cautions

Traders are being careful with USD positions ahead of the Federal Reserve’s announcement on Wednesday. While rates may stay the same, the Fed could take a softer stance due to recent weak economic data, which may limit the Dollar’s gains. Today, the Japanese Yen is performing well against the British Pound. The currency pairs show various percentage changes, with the JPY gaining 0.22% against GBP. Currently, the USD/JPY is trending upwards, remaining above 142.15, with targets set at 145.35 and 146.00. Harmonic patterns suggest a move towards these targets, with 127.25 as a possible correction point. If the price falls below 142.80, this outlook may change. This information is intended for informational use only and involves forward-looking statements that carry risks. We are seeing upward momentum in the USD/JPY pair, with short-term strength holding above the 142.15 mark. Technical indicators, especially the Relative Strength Index, suggest buyers are returning after the low around 142.00 in late May. This rebound aligns with recent shifts in sentiment following the Bank of Japan’s decision to keep rates unchanged, which raised doubts about immediate monetary tightening that had previously supported the Yen.

Fed Decision Impact

Tanaka’s team seems hesitant to offer stronger guidance due to ongoing uncertainty in global trade. Asia’s export-led economies are still facing challenges, leaving central banks in a wait-and-see mode. This decision led to the Yen losing its earlier gains, and the price movements have shown a clear trend towards US Dollar strength. However, there are resistance levels ahead. We are nearing the 145.35 level as well as the more distant 146.00 level, where selling may begin to increase. Before that occurs, all eyes are on Powell’s upcoming statement. Although rates are expected to remain unchanged, recent economic data, particularly soft job figures and slowing consumer demand, could lead to a dovish approach. If that happens, even without a rate change, excitement for the Dollar’s rise might diminish quickly. It emphasizes the importance of understanding tone and future guidance, not just the headline rate itself. Although the Yen lagged behind the Dollar today, it did see a slight gain against the Pound. A 0.22% increase against GBP may seem small but stands out amid broader Yen weakness. Crosses with Sterling might behave differently in the near term, especially if UK inflation data or central bank comments differ from expectations. Looking ahead, traders should note that technical indicators, like harmonic patterns, are guiding price expectations for USD/JPY towards those resistance levels, meaning the short-term trend remains strong unless prices fall decisively below 142.80. If that 142.80 mark breaks, it could lead to a drop as low as 127.25, although this scenario hasn’t gained significant support yet. We are closely monitoring how options data shifts after the Federal Reserve’s decision. The implied volatility ahead of Wednesday is high, suggesting potential sudden movements in either direction. This calls for careful positioning and tighter risk management rather than trades based on anticipation. Create your live VT Markets account and start trading now.

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