Will the yen hit 150 against the greenback?The Japanese yen fell to a seven-year low of 125 against the US dollar on Monday as the Bank of Japan continued easing its monetary policy further widening the gap with the US Federal Reserve’s hawkish tone.
But instead of seeing it as a threat to the Japanese economy, the BOJ reiterated that a weaker yen would have positive effects on pushing Japan’s GDP higher.
BOJ’s divergence from Fed
The US central bank recently raised interest rates for the first time since 2018 and signalled more rate hikes in the coming months to tame rising inflation. The US consumer inflation rate skyrocketed to a four-year high of 7.9% in February, prompting the Fed to take a more hawkish stance despite the lingering COVID-19 pandemic and geopolitical uncertainties.
Conversely, the BOJ continued to loosen its monetary policy, reiterating that it would maintain interest rates at ultra-low levels to support Japan’s economic recovery and as inflation stays below its 2% target. The central bank also offered to purchase an unlimited amount of government bonds from Monday through Thursday this week at 0.25%.
The offer is for debts with maturities of more than five years and up to 10 years. The move is one of the BOJ’s attempts to contain rising bond yields despite US Treasury yields reaching new multi-year highs.
Adding pressure to the yen
The measure further weighed on the yen on Monday, with economists from ING Bank expecting upside risks to prevail beyond 125. They said "130 is well within reach in the near term unless the bond environment improves.”
A depreciation in the Japanese yen would drive up the costs of imports, ultimately hurting households as it would increase the costs of imported goods and other goods for consumption.
It also pushed Japan’s core inflation to a two-year high of 0.8% in March, quicker than market forecasts.
Preference for a weaker currency
While many economies beef up efforts to boost the value of their currencies, Japan has been aiming to devalue its currency to gain a competitive advantage in foreign trade. A weak yen will make Japan-made goods more competitive overseas and increase profits that Japanese companies make in foreign markets. It would also lift services exports and increase net income receipts from abroad when converted into yen.
Back in January, the BOJ estimated that a 10% drop in the yen would boost Japan’s gross domestic product by about 1%. In the final months of 2021, Japan’s GDP rose 4.6% year over year, lower than its previous forecast for a 5.4% rise. Fitch Ratings expects Japan’s inflation at 1.8% this year on the back of higher energy prices and yen depreciation.
Preventing another 1998 yen volatility
As the yen continues to fall against the greenback, the markets are closely watching for a recurrence of a wild rebound that occurred in the USDJPY in 1998 at the height of the Asian financial crisis. At the time, the US dollar fell by almost 15% versus the yen from its previous peak. That slump was preceded by a three-year yen depreciation as Japanese authorities believed the yen was overvalued.
Will the yen hit 150 against the greenback?
The question of whether the yen will reach 150 versus the US dollar is more of a when as the Fed maintains its hawkish stance and as the BOJ is poised to keep its loose monetary policy setting in the medium term. This would further widen the gap between their policies, sending the yen lower as Japan continues to book current account deficits due to a jump in oil import prices.
Yenpairs
Maybe the top is hereThe yen's devaluation movement loses strength in the face of the external scenario and deterioration of purchasing power. The price should slowly move towards the base of the previous accumulation to gain force and perhaps retest its top, stuck in this region for a longer period. I don't believe in anything much more than 116,500, but in a probable reversal towards 110,000 throughout the year.
EURJPY no reversal yet, so ride the trendIf you know me then you also know Red is monthly fib, Weekly fib in blue and short term in Pink. You see gray fib, that's a big support, resistance whatever you want to say but that's the zone to look for.
Let's not fight the trend yet, it has gone fast to 131.85 and stalls there and everything tells me that it is way up to the trend line at 132-133. Now short term traders need to wait for any shorting . And people who trade 4 hours and 8 hours can happily ride from here to 132.5+ with a stop loss at around 131.20. What happens next, well as long as it does not touch 133.478, the resume to lower will start once but that is way too far for now.
EURJPY going up up up!EURJYP and the others mayor pairs against the JPY have broken the downtrend from 2008. EURJPY is forming a bullish flag and is highly probable that the price breaks out and continues its uptrend. I marked up the resistance levels to take partial profits. I'm planning to hold this trade for months since is a high timeframe but with big moves. If the price breaks out the resistance levels in the weekly timeframe I will add to my position. Is the price drops back down to the triangle area and closes in the weekly timeframe within it, the trade is invalid. The double bottom is pushing the price to the upside. Is going to be a choppy ride but the risk reward is worth it.
USD/JPY Technicals Show Chance for Major Move Lower The Japanese Yen strengthened against the US Dollar for a second week, with USD/JPY slicing below its 50-day Simple Moving Average (SMA) in the process. This comes after the pair rose to its highest level since January 2017 earlier this month.
The formation of a Bearish Engulfing Candlestick on the weekly chart sent a signal to Yen bulls last week. That, along with rejection from the 61.8% Fibonacci retracement, highlighted a strong level of resistance. The Relative Strength Index (RSI) is also showing some bearish divergence (highlighted by the red line in the chart).
Altogether, it looks like USD/JPY could be at the start of a longer-term downtrend. If so, a drop to the 38.2% Fib at 109.26 may be on the cards.
GBP/JPY SELLif you look at CHART on the circle where the heart is, you will notice there is also a buyers trap because it wicked back 40 pips that was the highest point the market went recently.
then you can see the next 2 days it came up and it never hit that highest point again. then it got exhausted at 148.984 and it just dropped.
it has been a lot of sellers at the current level in the past to. and you must remember the market repeats it self so we do not trade the future we trade the past.
Market looks it can drop from here considering the bears look like they are in control. 146.988 is take profit
USDJPY SHORT U/J showing signs of reversal (15m-30m) towards the downside, as price has reached a level of resistance and shows sign of dying momentum at the peak.
RSI revealing divergence a great sign of price reversal
Will enter for a Short position when MA cross and SARS are indicated above candlestick confirming bearish trend.
DYOR NOT FINANCIAL ADVICE
Comment thoughts below
Best,
Kwmae
USDJPY LOSING STEAM? - 10/05/2021HELLO TRADERS,
Quick Overview of USDJPY>
After a Bullish run to the 112 handle last week,
we are expecting a potential bearish correction to the downside to complete a Bull flag formation.
KEY RESISTANCE 111.400/600 AREA
OANDA:USDJPY
POTENTIAL BULL FLAG FORMATION UNDERWAY
Always trade only with what you are willing to lose.
The Trading Regime.
EJ outcomes in the coming few weeksThis pair is just as crucial to watch out for just as GJ and UJ, as they all will majorly depend on how Japanese yen move in the coming days. As we all know whats going on with the Evergrande situation, if they say anything about defaulting on their current debt, investors will look toward putting their money in jpy as it is considered a save haven during situations like these.