USDJPY Tumbles for Fourth Consecutive Week Ahead of BoJ Meeting

The USD/JPY has been on a decline for the fourth consecutive week amid rumors of BoJ intervention and ahead of their corresponding policy meeting next week. The exchange rate between the US Dollar and Japanese Yen has dropped by 4.2% since June. Traders will be closely monitoring the USDJPY later today as significant economic data that has the potential to affect currency valuations is due to be released.

High Impact Economic Events

Wednesday 07:30 (GMT+0) -Germany: Flash Manufacturing PMI (EUR)

Wednesday 13:45 (GMT+0) – Canada: BoC Interest Rate Decision (CAD)

Wednesday 14:00 (GMT+0) – USA: New Home Sales (USD)

Wednesday 23:00 (GMT+0) – Korea: GDP q/q (KRW)

Thursday 08:30 am (GMT+0) – Germany: Ifo Business Climate (EUR)

Thursday 08:30 am (GMT+0) – USA: GDP q/q (USD)

Thursday 12:30 (GMT+0) – USA: Core Durable Goods Orders m/m (USD)

Friday 12:30 (GMT+0) – USA: Core PCE Price Index m/m (USD

The USDJPY followed an upward trend since December 28, when the exchange rate bounced off the support area of 140.245. The currency pair indicated a textbook-like uptrend with higher peaks and troughs, consistently staying above the 50-period Exponential Moving Average (EMA). On July 7, the USDJPY reached a high of 161.944, which is the highest level recorded for the year. However, as the price failed to surpass the 161.944 mark, a technical reversal to the downside, known as a failure swing, indicated a potential decrease in the exchange rate. This was evident as the peak at 161.800 was lower than the previous peak of 161.944, and prices subsequently fell below the trough at 160.256. Both the 50-period EMA and the Momentum oscillator currently support a bearish trend for the pair. Specifically, prices are trading below the EMA, and the Momentum oscillator registers values below the 100 baseline. By applying the Fibonacci Retracement tool from the swing low of 155.356 to the swing high at 157.858, three potential price targets can be estimated.

Should the buyers seize market control, traders may direct their attention toward the three potential resistance levels below:

157.858: The primary resistance price is 157.858, coinciding with the swing high from July 19.
160.256: The subsequent resistance is determined at 160.256, reflecting the trough of the failure swing marked on July 8.
161.944: An additional resistance level is positioned at 161.944, aligning with the yearly high of 161.944, which was marked on July 3.

Should the sellers maintain market control, traders may consider the four potential support levels listed below:

153.810: The primary downside target is established at 153.810, reflecting the 161.8% Fibonacci Extension drawn from the swing low at 155.356 to the swing high at 157.858.
151.308: The second support level is 151.308, drawn as an internal trendline through highs and lows.
149.240: The third support line is identified at 149.240, derived from the 261.8% Fibonacci Extension between the swing low of 155.356 and the swing high of 157.858.
147.389: An additional support level is estimated at 147.389, calculated as the 423.6% Fibonacci Extension between the swing low and the swing high of the most recent swing.

In conclusion, the USDJPY has seen a significant decline over the past month, influenced by geopolitical events, speculation of the Bank of Japan’s intervention, and anticipation of upcoming policy meetings. The exchange rate has decreased by 4.2% since June, marking the fourth consecutive week of decline. Traders are expected to keep a close watch on the pair as significant economic data is released this week, which could further impact currency valuations. The technical analysis indicates a bearish trend supported by both the 50-period EMA and the Momentum oscillator. Key resistance and support levels have been identified, providing potential price targets. As the market responds to upcoming economic events, these levels will be pivotal in determining the future direction of the USDJPY exchange rate.