- Yen strengthens as investors seek safety amid unconfirmed trade deal rumors between US and China.
- USD/JPY finds support at 20-day SMA; daily close above 144.00 needed to regain bullish traction.
- Break below 143.00 could expose 141.97 and the YTD low at 139.88.
The USD/JPY currency pair experienced a decline late in the North American trading session, as risk-averse investors sought refuge in the Japanese Yen (JPY), leading them to divest from the US Dollar (USD). This flight to safety occurred amidst a dearth of official confirmations regarding potential trade agreements between the United States and China, despite persistent market speculation suggesting that preliminary discussions are imminent. As of the latest update, the USD/JPY is trading at 143.80, reflecting a decrease of 0.80% on the day. Market participants are closely monitoring developments in US Treasury yields, which have shown some volatility recently, and upcoming economic data releases from both the US and Japan for further clues on the currency pair’s trajectory.
USD/JPY Price Forecast: Technical outlook
From a technical analysis perspective, the USD/JPY pair currently exhibits a downward bias, having registered a lower low for the second consecutive trading day. However, the pair encountered a support level at the 20-day Simple Moving Average (SMA), positioned at 143.43. This support level provided a temporary floor, allowing buyers to subsequently elevate the pair above the Kijun-Sen level, currently observed at 143.70. The Kijun-Sen is a component of the Ichimoku Kinko Hyo indicator, often used to gauge medium-term momentum.
While this rebound from the 20-day SMA and breach of the Kijun-Sen could potentially pave the way for a recovery, bullish traders will require a confirmed daily close above the 144.00 level to validate any upward momentum and to signal a potential test of higher price levels. Failure to achieve this would suggest continued bearish pressure. Conversely, should sellers manage to drive the USD/JPY below the 143.00 threshold, this would likely clear the path for a retest of the April 29 swing low, located at 141.97. A breach of this level would then bring the year-to-date (YTD) low of 139.88 into focus as the next significant support target. Traders are also watching for potential intervention signals from the Bank of Japan, which could influence the pair’s movement.
