USD/JPY Analysis: The Market is Indecisive Near Its Peak Since May 1


As the USD/JPY chart shows today:

→ The price is in an upward trend (indicated by the blue channel) that has been relevant since the beginning of 2024.

→ On Thursday, May 23, the exchange rate nearly reached 157.2 yen per US dollar, surpassing the peak of May 14.

→ Following this, the market began to stabilise – indicated by the Bollinger Bands' width showing low volatility, which can be interpreted as a sign of market equilibrium or indecision among participants.

What balances the market? The equilibrium of supply and demand forces and the anticipation of important news in the week ahead.

Bullish arguments:

→ The price has twice (shown by arrows) rebounded sharply from the median line of the upward channel. On both occasions, bulls managed to reverse aggressive declines in the USD/JPY price and return to the upper line.

→ The Bank of Japan's interest rates are much lower than those in the US. Judging by the latest US economic data, the Federal Reserve may maintain high rates for a longer period.

Bearish arguments:

→ We do not see continued upward momentum in the price after surpassing the May 14 peak. Moreover, the USD/JPY price cannot sustain above the "round" level of 157.00.

→ The price is near the upper boundary of the channel, which could act as resistance.

→ It is important to note the levels of 160 and 157.9 in the background, from which the price fell sharply, indicating possible intervention by the Bank of Japan to support the excessively weak yen.

Given that today is a holiday for financial institutions in the US and the UK, indecision may continue until tomorrow when Japan's inflation data is released at 8:00 GMT+3. Also noteworthy:

→ US GDP news will be published on Thursday at 15:30 GMT+3.

→ The US Personal Consumption Expenditures (PCE) index will be released on Friday at 15:30 GMT+3.

These and other fundamental drivers may disrupt the current balance of the USD/JPY price, which still appears stable for now.

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