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market analysis
The USD/JPY exchange rate stabilizes at around 156.300, with volatility awaiting a breakthrough under the long-short game.
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market xmmarkets.cnmentary]: The US dollar/Japanese yen exchange rate has stabilized at around 156.300, and volatility needs to be broken under the long-short game." Hope this helps you! The original content is as follows:
In the long-short game in the global foreign exchange market, the USD/JPY exchange rate has recently shown a narrow range of fluctuations and has stabilized near the key level of 156.300. From the perspective of technical indicators, the average true range (ATR) indicator continues to be in the recent low range, and the overall downward trend is maintained. This phenomenon is directly related to the slowdown in market trading brought about by the U.S. Thanksgiving holiday. During the holiday, many institutional investors chose to stay on the sidelines, market capital activity was significantly reduced, and the power of buying and selling orders was relatively balanced. It also reflects the cautious mentality of current foreign exchange market participants. Faced with multiple intertwined influencing factors, traders are xmmarkets.cnprehensively weighing the pros and cons, and no clear directional consensus has yet been formed.
From a fundamental perspective, the trends of the US dollar and the Japanese yen are both driven by key macro factors, and the long and short forces are in a delicate balance.
On the one hand, the Federal Reserve’s monetary policy expectations have become the core factor suppressing the strength of the US dollar. As U.S. inflation data gradually falls back toward the target range, market expectations for the Federal Reserve to launch an interest rate cut cycle next year continue to rise. Interest rate futures market data shows that investors’ pricing probability of an interest rate cut in March next year has significantly increased. Against this background, many Federal Reserve officials issued dovish public remarks this week, clearly mentioning that "the impact of the downward trend in inflation on policy adjustments needs to be paid attention to" and "excessive tightening should be avoided as a drag on economic growth." This has further strengthened the market's expectations of interest rate cuts, causing the U.S. dollar index to xmmarkets.cne back under pressure, indirectly affecting the upward momentum of the U.S. dollar/yen.
On the other hand, the fluctuations in the valuation of the yen are affected by multiple factors:
The economic plan launched by Prime Minister Sanae TakaichiEconomic Stimulus Plan: This plan focuses on boosting domestic consumption, increasing infrastructure investment and supporting the development of small and medium-sized enterprises. The total scale exceeds one trillion yen. The market expects that the loose fiscal policy will indirectly affect the liquidity environment of the yen and form a certain support for the yen exchange rate; the market expects the Bank of Japan to intervene to support the weakening yen: Since the yen against the US dollar exchange rate broke through the psychological mark of 150, Bank of Japan officials have repeatedly issued verbal warnings, emphasizing that "it will pay close attention to excessive exchange rate fluctuations and take action when necessary." The market generally expects that if the exchange rate continues to approach the 157-158 range, the Bank of Japan may launch direct foreign exchange intervention. This expectation limits the depreciation space of the yen to a certain extent; geopolitical tensions between China and Japan: recent bilateral trade frictions and regional security issues have attracted market attention. The rise in geopolitical risks has promoted the flow of some safe-haven funds to Japanese yen assets, providing periodic support for the Japanese yen, but at the same time, it has also intensified the uncertainty of short-term fluctuations in the exchange rate.
USD/JPY Technical Analysis
Judging from the trend of technical charts, the current market is in an obvious equilibrium state, and the long and short sides have not yet formed an effective breakthrough.
Reviewing the previous trend, after successfully breaking through the important psychological mark of 150, USD/JPY took advantage of the trend to form a clear ascending channel, which has continued to guide the exchange rate upward in the past month. However, the momentum of the exchange rate has weakened recently, and it has gradually fallen from the upper track area of the channel to near the lower track. It is worth noting that the middle track of the channel, which was originally an important support, has been transformed into a key resistance level during the decline of the exchange rate (as shown by the arrow). It has repeatedly suppressed rebound attempts of the exchange rate, indicating that the short-term market's long power has been exhausted.
Further observation shows that the USD/JPY is currently in a narrow triangular range. The formation of this technical form indicates that the market is brewing a new directional breakthrough. This range is xmmarkets.cnposed of the following two key trend lines: The lower boundary - the line that divides the lower half of the ascending channel into two parts. Currently, this line The position forms an effective support in the 156.000-156.100 range, which has repeatedly prevented the exchange rate from falling further; the upper boundary is a downward trend line formed by connecting a series of low points formed since last week. The current resistance level is in the 156.500-156.600 range, which significantly suppresses the rebound of the exchange rate.
From the perspective of technical analysis logic, triangle range consolidation is often a signal that the market is gaining momentum, and the direction of subsequent breakthroughs will directly determine the short-term trend of USD/JPY. What needs to be vigilant is that the breakthrough of this range may be sudden and xmmarkets.cnplex - the current low market volatility does not mean the end of the trend, but may be a process of accumulating power between the long and short sides. Therefore, USD/JPY traders should not take it lightly due to short-term shocks. In particular, we need to pay attention to the policy trends of the Bank of Japan. After multiple verbal warnings, if the exchange rate continues to extend in the direction of the weak yen, the Bank of Japan is entirely likely to take direct intervention measures, and this action will break the current technical balance, with a high probability of causing USD/JPYThe yuan experienced a sharp correction, even ending its previous upward channel.
The above content is all about "[XM Foreign Exchange Market xmmarkets.cnmentary]: The USD/JPY exchange rate stabilizes at around 156.300, and the volatility needs to be broken under the long-short game". It is carefully xmmarkets.cnpiled and edited by the XM foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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