The Japanese Yen is Another Decade Low, Testing 155.00 Marks

The value of the Japanese yen relative to the US dollar has dropped to its lowest point in decades. Now close to the 155.00 mark, traders were waiting to see if it would go even lower before another trade. Observers believe that the difference between the US and Japanese interest rates will continue to grow for some time. Additionally, positive sentiment in the markets, helped by easing pressure in the Middle East, weakens the yen. Usually considered a safe currency, but not anymore.

The U.S. dollar has rebounded after its recent slump, helping to improve the USD/JPY pair. However, it is unclear whether the Japanese yen will continue to weaken, especially with rumours that the Japanese authorities are taking measures to strengthen their currency. On Friday, a key decision came from the Bank of Japan, which could affect the direction of the yen. Additionally, important economic data from the US, including the GDP report and inflation estimates, will be released soon and could affect the trajectory of the two currencies.

The Yen Remains Under Pressure Despite the Expected Intervention

The Japanese yen is struggling to recover from a multi-decade slump against the U.S. currency. Despite the Bank of Japan’s cautious tightening of economic conditions, the yen remains under pressure. Geopolitical tensions in the Middle East are easing, which is generally good news for the global economy, but it also makes the presence of a safe country less attractive to investors.

Japanese officials have warned that they may intervene in markets to shore up the yen, but so far that has not been enough to lift the currency. A recent survey showed that many Japanese companies plan to raise wages by 2024, but labour shortages remain a major concern.

According to the latest PMI data, economic growth is slowing in the United States. The S&P Global Composite PMI fell to 50.9 in April, reflecting slower expansion in the US in the private sector. According to the S&P Global Manufacturing PMI, manufacturing is declining, falling to 49.9%.

Investors are now focusing on the US on the upcoming release of data, including durable goods orders, subsequent GDP in Q1, and the Price Index of Personal Consumption Expenditure (PCE), It is unlikely that the Federal Reserve will start cutting interest rates in June, according to market expectations, its rate shows cuts in The total number is expected to be less than two.

Friday’s BoJ policy meeting will be closely watched to determine when the central bank will raise interest rates again, which will likely affect the yen’s trajectory. Currently, the U.S. recovering dollar is supporting the USD/JPY pair, but market expectations could change based on upcoming data releases.

Technical Approach

The USD/JPY pair remains dominated by buyers, trying to maintain strength above 155.00 on the chart. The USD/JPY pair has been sideways for a week or so on the chart after a sharp rally from the March low, signalling a bullish break but the Relative Strength Index (RSI) on the daily chart crashes warn that the USD/JPY pair is too strong.

If the USD/JPY pair depreciates, it should find support around 154.55–154.45 and then 154.00 on the chart. If it breaks below 154.00, it could fall back down to last Friday’s lows around 153.60-153.55 on the chart. On the other hand, if the price of the USD/JPY pair continues to rise and break above 155.00 on the chart, it could trigger further buying and extend the rally that began about two months ago.

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