USD/JPY could experience volatility due to recent developments in Japan. Japanese stock markets rallied following a positive PMI in the services sector, indicating sustained growth and supporting the possibility that the Bank of Japan will raise interest rates. This prospect of tighter monetary policy could strengthen the yen against the dollar. However, weakness in the manufacturing PMI and the possible slowdown in the US, reflected in the downward revision of payrolls, could limit the impact on USD/JPY. The focus will be on Japanese inflation data and Jerome Powell's speech in Jackson Hole, which could influence market expectations and thus the behavior of this currency pair.

Looking at the chart, the Yen is currently on its way to appreciation against the US dollar. The volatility experienced over the last few months has brought the Yen back to March prices this year. Currently its control point (POC) is located around 150.496 more or less in the middle zone of March this year. At the moment the RSI is oversold at 34.82%, it would not be unusual to witness another possible attempt to break out of the long term range despite the interest rate adjustments, but in the long term the BoJ's idea is to return to the 140,400 yen per dollar area.

Ion Jauregui - ActivTrades Analyst





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