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USD/JPY Analysis: August 06, 2024
USD/JPY Analysis: August 06, 2024
The USD/JPY currency pair witnessing a decline of 5 consecutive days, gets reversed on Tuesday, August 6, 2024. Let’s take a closer look into it:
Fundamental Analysis
Key factors such as the Bank of Japan's policy rate, the Federal Funds Rate, and U.S. labor data significantly influenced the USD/JPY currency pair.
On July 31, 2024, the Bank of Japan raised its interest rates more than expected, reaching a new high of 0.25%. Meanwhile, the Federal Reserve maintained its rates at 5.50%, as anticipated, and hinted at the possibility of rate cuts in September during the FOMC meeting.
Furthermore, the weak labor market data in the U.S., including the Non-Farm Employment Change and the Unemployment Rate released on Friday, August 2, 2024., caused the U.S. Dollar Index (DXY) to drop by approximately 0.58%, leading to a depreciation against the Japanese Yen, causing the currency pair to further decline.
Technical Analysis
Figure 1: USD/JPY, Daily-Timeframe, trading view
From a technical perspective, the USD/JPY currency pair is exhibiting a bearish momentum, confirmed by the 20 and 12 moving averages. If this downward trend continues, the pair could test the 140.870 support level, and if broken, it may further decline to 138.020, as per analysts analysis. On the daily time frame, there is a critical resistance level at approximately 146.493, which was reached today. If this resistance is breached, the pair could potentially test the 0.236 Fibonacci retracement level, aiming for a price of 148.446, as per analyst analysis.
Disclaimer: The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.
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