Analysis of USD/JPY: Yen Strengthens by 5.5% Against US Dollar in 2 Weeks

On Thursday, 11 July, the USD/JPY exchange rate was above 161, and today it is below 153.

According to Reuters, this could be attributed to effective intervention by the Bank of Japan.

While intervention was anticipated when the yen weakened to extreme levels not seen since 1983, Tokyo authorities were cryptic in their comments, maintaining uncertainty, making it harder for investors to predict when and how they might intervene.

As indicated by today's USD/JPY chart:

→ The ascending trend channel (shown in black) that has been in place since 2023 is losing its relevance.

→ Red circles indicate pivotal points where significant price action occurred, helping to define the contours for a descending channel (shown in red).

→ The USD/JPY rate is near the lower boundary of the red channel. According to technical analysis, this boundary tends to act as support for the price – a bullish argument suggesting that the decline might slow down here.

Whether there will be a rebound from the lower line of the descending channel or the bears will manage to break through the 152 level (where the price found support in May) will largely depend on next week’s news: Tuesday will bring reports on inflation and unemployment in Japan, and Wednesday will see statements from the Bank of Japan regarding the interest rate.

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