Slight rebound for USD/JPY today as markets reassess, inching up by 0.58%.
Key Points
- Shockwaves hit USD/JPY as an unexpected BoJ rate hike drives a significant 1.60% drop!
- Japanese equity markets bounce back, lifting the Nikkei index by 10% after a sharp decline.
- Geopolitical tensions in the Middle East could sway safe-haven flows into the yen, affecting USD/JPY.
USD/JPY Daily Price Analysis – 06/08/2024
On the last trading day of the previous week, USD/JPY opened at 146.500 and closed at 144.198, marking a significant decline of 1.60%. The primary driver behind this drop was the unexpected rate hike by the Bank of Japan (BoJ) to 0.25%, its highest in 16 years. This move was aimed at stabilizing the yen and combating rising inflation, which has been eroding household purchasing power. Additionally, the release of weaker-than-expected U.S. job data further fueled this downward momentum. The U.S. labor market showed a slowdown, with the unemployment rate rising to 4.3%, indicating potential economic softening and reinforcing expectations for future Fed rate cuts.
Today, USD/JPY opened at 144.195 and has seen a slight increase to 145.006, a 0.58% rise so far. This rebound can be attributed to a slight reassessment by the markets after the significant movements in the previous week. The yen’s strength has been partially tempered by a broader market realization that recent reactions might have been overdone. Equity markets in Japan also showed signs of recovery, with the Nikkei index gaining 10% following a steep decline.
Key Economic Data and News to Be Released Today
Today, the key data release will be the U.S. trade balance report. A larger-than-expected deficit could put additional pressure on the USD as it may reflect weaker economic activity. Conversely, if the trade figures are better than expected, it could support the dollar.
Additionally, any further commentary from Fed officials regarding the economic outlook and monetary policy will be critical. Traders should also keep an eye on global geopolitical developments, such as tensions in the Middle East, which could influence safe-haven flows into the yen.
USD/JPY Technical Analysis – 06/08/2024
As of the latest data, USD/JPY is trading below the 200-day EMA, which is positioned around 147.50. This suggests a bearish trend is currently dominating the market. It’s important to note that the RSI for USD/JPY is around 35, indicating that the pair is approaching oversold territory.
In the short term, USD/JPY might experience a minor rebound due to its oversold RSI condition. However, the broader trend remains bearish, and the pair is likely to face resistance around the 200-day EMA at 147.50. Traders should also watch out for any breaks below the 144.00 support level, which could signal further downside. Conversely, a move above 147.50 would require a reassessment of the bearish outlook.
USD/JPY Fibonacci Key Price Levels 06/08/2024
Short-term traders planning to invest in USD/JPY today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 142.283 | 146.073 |
| 141.112 | 147.244 |
| 139.217 | 149.139 |
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
