05.11.202412:52 Forex Analysis & Reviews: USD/JPY. Analysis and Forecast

Today, the Japanese yen weakened slightly, but the decline remains limited. Japan's political landscape may hinder further interest rate hikes by the Bank of Japan. However, Bank of Japan Governor Kazuo Ueda's comments during last week's press conference did not rule out the possibility of a rate hike at the BOJ's December Monetary Policy Meeting. In addition, market nervousness ahead of the tense U.S. presidential election and geopolitical risks are providing some support to the yen as a safe-haven currency.

Moreover, the narrowing yield differential between the U.S. and Japan helps limit the yen's losses, while the subdued movement of the U.S. dollar restricts the USD/JPY pair from advancing higher. Investors appear convinced that the Federal Reserve will cut interest rates by the end of this week. Furthermore, the conclusion of the election is contributing to a continued decline in U.S. Treasury yields, keeping dollar bulls in a defensive position. These factors, in turn, suggest caution when positioning for any significant upward intraday movement.

From a technical perspective, the psychological level of 152.00 serves as immediate support, just before yesterday's swing low near 151.53, which coincides with the 200-day Simple Moving Average (SMA). Any subsequent selling could pull USD/JPY below the 151.00 level, potentially testing the 100-day SMA, currently located near the 150.30 level, passing the convergence of the 100- and 200-day SMAs. Beyond this, the psychological level of 150.00 could set the stage for deeper losses if decisively broken.

On the other hand, momentum above yesterday's high and the overnight swing in the 152.60 level could extend to the psychological level of 153.00. A further upward movement could push USD/JPY toward the 61.8% Fibonacci level, approaching last week's three-month high. Sustained strength beyond this level would be seen as a new trigger for bulls. With oscillators on the daily chart remaining in positive territory, spot prices may rise to the next significant resistance in the 154.60-154.70 range before targeting the psychological 155.00 level.