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27 March 2024 | FXGT.com

A Historic Breach or Retreat? USD/JPY in Critical Resistance Zone

  • USD/JPY Nears Ultimate Resistance: The USD/JPY pair has surged, nearing the critical ¥152 level, a resistance not breached since the early 1990s. This level has historically been a point of contention, with October 2022 and November 2023 seeing the USDJPY reject this threshold.
  • Japanese Authorities’ Intervention Concerns: The proximity of the yen to the ¥152 mark raises alarms about potential intervention from Japanese authorities. Japan’s finance minister’s comments about “decisive action” echo previous instances of yen-supportive measures.
  • Impact of BoJ Warnings or Interventions: Any additional warnings or direct interventions by the Bank of Japan could influence the market’s direction, potentially reversing the bullish trend if the pair falls below key support levels.
  • Bullish Trend with Room for Upward Movement: Despite the pair’s uptrend, RSI indicators do not suggest overbought conditions, hinting at the possibility for further gains. The ¥152-resistance level remains a significant barrier, with the market currently in a phase of sideways consolidation in the short term.
  • Potential for New Highs: Absent any policy changes or interventions, surpassing the ¥152 mark could set the stage for reaching new highs, with ¥153.50 identified as the next target level.
  • Short-Term Support at ¥151: This level has served as a foundation during the recent consolidation phase. A breach below this point would indicate emerging weakness in the current bullish momentum, marking it as a critical juncture for traders monitoring short-term movements.
  • Early Weakness in USD/JPY: The pair is showing signs of early weakness, highlighted by noticeable volatility and the appearance of a large bearish candle on the hourly chart. This recent development suggests a retest of the support level at ¥151 will be pivotal in determining the next directional wave.
  • Crucial Daily Trend Support at ¥150.30: Positioned as a significant support for the daily trend, a break below ¥150.30 could indicate a pivotal shift in market sentiment, possibly signaling the start of an extended corrective wave.
  • Delicate Market and Policy Balance: The situation around the USD/JPY pair illustrates the delicate balance between market forces and policy interventions in determining the yen’s value, with the potential for significant shifts in currency dynamics based on the actions of Japanese authorities.

USDJPY 4 Hour Chart

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