The Japanese Yen was the best performing G10 currency during today’s Asia-Pacific session. The gains came despite Japan’s Q3 2023 GDP report missing expectations and showing a 0.7% quarter-on-quarter contraction in the July-September 2023 period. The pair was falling more than 1% at one point. However, those highs were completely erased during the European morning, and the pair is now trading slightly higher on the day. There was no news that could justify a reversal in the Japanese Yen market. However, the reversal supports a bullish technical scenario.
If we look at the USD/JPY chart on the D1 interval, we can see that the pair declined yesterday but erased part of the decline, rose again above the minimum of the equilibrium structure and finished trading above the 200 SMA sessions (purple line). Another attempt was made today to break below these two key technical levels, but it failed again, with the USD/JPY rising again above the aforementioned moving average. As a result, today’s daily candle took the form of a bullish Pinbar. Failure to break below the breakeven structure indicates that the pair’s uptrend remains intact. In addition, the medium-term support area at 144.50 seems to be a good place to start a recovery move from a technical point of view, especially in light of the possibility of a Pinbar pattern being drawn in the area today. If this is the case and the USD/JPY pair starts a recovery move, the first short-term resistance level to watch could be found at the 146.50 swing zone.
However, traders should be careful when trading the currency pair linked to the Japanese Yen. The currency is extremely volatile as markets appear to be preparing for an imminent exit from the Bank of Japan’s ultra-loose monetary policy. Recent movements in the Japanese Yen market show that expectations for the Bank of Japan’s turnaround are very high. This means that JPY risks are actually tilted to the downside ahead of the Bank of Japan’s December meeting (Dec 19, 2023), as failure to show a hawkish bias could lead to a significant weakening of the JPY and a rise in the pair. .
Source: XStation 5
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