USD/JPY Price Forecast: Bounces up from lows with bulls aiming for 158.65
The US Dollar has retraced previous losses against the Japanese Yen (JPY) on Monday, with the USD/JPY pair returning above the 158.00 line, after bouncing up from Friday’s low, at 156.68. The pair has regained some momentum, and bulls are aiming at last week's highs, in the 158.65 area.
The Bank of Japan (BoJ) summary of opinions, released earlier on Monday, revealed concerns about mounting inflation but also a split committee regarding the pace of upcoming rate hikes, which hurt investors' confidence in the Yen. Beyond that, the Japanese Current Account posted its first deficit in one-and-a-half years, adding weight to the Japanese Yen.
These figures have offset the negative impact on the US Dollar from the unexpected contraction in US Nonfarm Payrolls seen on Friday. Data by the US Bureau of Labor Statistics showed a 23K decline in net employment in July, against market expectations of an 80K increase, and the previous two months' readings were revised sharply lower. These figures cooled hopes of near-term interest rate hikes by the Federal Reserve (Fed) even further and sent the USD tumbling across the board.
Technical Analysis: The Dollar trades within an ascending channel
The USD/JPY trades at 158.38, holding within an ascending channel from August 3 lows at 155.23. Momentum indicators show mild upside traction, with the Relative Strength Index (14) crossing above the 50 midline and the Moving Average Convergence Divergence (MACD) at modestly positive levels, altogether hinting at a stabilizing upside momentum within this short-term uptrend.
Bulls are looking at the 38.2% Fibonacci retracement around 158.65, which capped rallies last week. Further gains are likely to test the channel top, now around 159.25. A confirmation above here would bring the area between the 61.8% Fibonacci retracement, at 160.64, and the July 31 highs, near 160.90, to the focus.
On the downside, the channel bottom, at 157.05, and Friday's low, near 156.70, are likely to provide significant support ahead of the mentioned August 3 low, at 155.23.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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