23.09.202415:23 Forex Analysis & Reviews: USD/JPY. Analysis and Forecast

At the monetary policy meeting on Friday, the Bank of Japan maintained its target interest rate in the range of 0.15–0.25%. The head of the Bank of Japan, Kazuo Ueda, emphasized that the Central Bank will continue to adjust the degree of monetary policy easing as necessary to achieve economic and inflationary goals. He acknowledged that signs of underlying weakness are still present, even though the Japanese economy is showing signs of moderate recovery.

The U.S. dollar continues to rise as Treasury bond yields recover from their previous declines.

However, the U.S. dollar could encounter challenges due to growing expectations of additional rate cuts by the Federal Reserve in 2024. According to the CME FedWatch tool, there is a 50% probability of a 50 basis point rate cut to a range of 4.00–4.25% by the end of this year.

From a technical perspective, the USD/JPY pair tested the 144.50 level and the key level of 144.00, close to the upper boundary of the downward channel.

A breakout above the upper channel level will shift the trend from bearish to bullish. However, the 14-day Relative Strength Index (RSI) is still slightly below the 50 level. A break above this level would signal the emergence of bullish sentiment.

Immediate resistance will be encountered at the psychological level of 145.00, and a decisive breakout above this level would favor the bulls.

On the other hand, the USD/JPY pair is already attempting to surpass the 21-day Exponential Moving Average (EMA), followed by the 9-day EMA, slightly below the 143.00 level. A break below the latter could push the pair toward the lowest level seen since June 2023, around 139.55.