Will Japanese Yen Continue to Rise Amid Global Economic Uncertainty

The Japanese yen has been on a steady rise in recent times, and many are wondering if this trend will continue. The yen's value has increased by 5% in the past quarter, making it one of the top-performing currencies globally.

The yen's strength is largely due to Japan's stable economy, which has been a safe haven for investors during times of global economic uncertainty. Japan's low inflation rate and high savings rate have also contributed to the yen's rise.

Investors are increasingly turning to the yen as a safe-haven asset, driven by concerns over global economic instability. In fact, the yen's safe-haven status has been reinforced by its correlation with the US dollar, which has been volatile in recent times.

The yen's rise is also being fueled by Japan's large trade surplus, which has helped to boost the currency's value.

The Japanese yen has been on a tear lately, and it's hard not to notice. The USD/JPY is trading at 148.86, down 0.31% on the day, its best showing since May 11.

The yen's spectacular turnaround is being driven by the Bank of Japan's decision to raise interest rates to 0.25%, its second rate increase since March. This indicates that the BoJ is slowly making the shift to normalization after decades of an ultra-loose accommodative policy.

The BoJ's rate hike is just one part of the story, however. Investors have also become less enthusiastic about the US dollar now that a September cut is looking very likely, and are looking to park their assets elsewhere.

The US economy is showing some signs of weakness, such as the ISM manufacturing PMI for July, which posted the sharpest contraction since November 2023. This has driven funds away from the US dollar towards safe-haven assets such as the yen.

Here are some key support and resistance levels for USD/JPY:

The BoJ's decision to taper its bond purchases is also a tightening step that's contributing to the yen's rise. And with the government's annual white paper on economic and fiscal policy showing signs of breaking out of deflation, it's clear that change is afoot in Japan.

The Bank of Japan (BoJ) is sticking with its plan to expand the monetary base until CPI levels exceed 2%. This means the BoJ will continue to ease monetary policy to stimulate the economy.

The BoJ plans to review its various monetary easing measures that have been in place since the Japanese economy fell into deflation in the late 1990s. This review aims to assess the effectiveness of these measures and potentially make changes to improve the economy.

A weak global economy typically strengthens the yen, as investors seek safe haven currencies. However, a strong global economy weakens the yen, as investors look to higher-yielding currencies.

The Bank of Japan's monetary policy has a significant impact on the Japanese yen's value. The BoJ plans to review various monetary easing measures that have stayed the same since the Japanese economy first fell into deflation in the late 1990s.

A weak global economy typically strengthens the yen, as it is seen as a safe haven currency. The global economy also plays a significant role in the strength of the yen.

The strength of a country's currency largely reflects the state of its economy. The Japanese economy has been in a state of stagnation for many years, with low GDP growth, low inflation, and a negative interest rate policy.

The BoJ will stick with expanding the monetary base until CPI levels exceed the targeted 2%. This has a mixed effect on the Japanese yen forecast, initially weakening it but then regaining strength as investors weigh the potential benefits and risks of the BoJ's policy.

Bank of Japan officials continue to uphold their hawkish bias, fueling the narrative of a potential rate hike coming before year end. This expected policy normalization coupled with US yields falling to 17-month lows have dragged USD/JPY to a new 2024 low point at 140.50¥.

Japan's trade balance is a significant factor in the country's economy. Japan is a net importer of goods, which means it imports more than it exports.

This has led to a large trade deficit, with the yen being sold for foreign currencies to facilitate trade with other international sellers.

The Japanese yen's value can be heavily influenced by global and political factors. A weak global economy typically strengthens the yen, as it's seen as a safe haven currency.

Investors often look to the yen as a secure investment during times of economic uncertainty. A strong global economy, on the other hand, weakens the yen, as investors seek higher-yielding currencies.

Japan's relationship with China and the United States significantly affects the yen's value. Any sign of political animosity or dealings between these nations will directly impact demand for the yen.

A conflict between the United States and China could cause investors to seek other reserve currencies as safe-haven assets, strengthening the yen. This would likely happen as investors seek stability and security in their investments.

The USD/JPY pair has been in an uptrend for several years, having made higher highs and higher lows as marked by the upward trendline. This indicates a strong upward momentum.

The recent BoJ meeting, where Governor Kazuo Ueda pledged to sustain ultra-low interest rates, might catalyse an upward movement above the existing supply zone. As of 29th August 2023, USDJPY seems to be on the verge of breaking through the supply zone with a range of 145 to 147.

A break above the 141.032 resistance level could support a move toward the 142.500 level, which may give the bulls a run at the 143.495 resistance level.

The USD/JPY pair has been in an uptrend for several years, having made higher highs and higher lows as marked by the upward trendline. This uptrend is evident in the technical analysis provided by TradingView as of August 29, 2023.

The USD/JPY pair has been on an upward trend thanks to the spiralling value of the Japanese Yen. This is shown in the ascending triangle pattern, where USD/JPY seems to be heading higher and following the trend.

As of August 29, 2023, USDJPY seems to be on the verge of breaking through the supply zone with a range of 145 to 147. This could be a significant development for traders and investors.

The Bank of Japan's policy meeting has left Japanese yen traders anxious, with Governor Ueda's cautious tone in the press conference. This has led to a drop in the value of the Japanese yen against the US dollar.

A USD/JPY break above the 141.032 resistance level could support a move toward the 142.500 level. This is according to the daily chart, which suggests that a break above this level could lead to further gains.

The 14-day RSI at 31.12 suggests a USD/JPY drop below 140 before entering oversold territory. This could be a sign that the pair is due for a correction.

Here is a summary of the key technical levels to watch:

These levels are based on the analysis provided by TradingView and the daily chart. It's essential to keep an eye on these levels and adjust your trading strategy accordingly.

Looking at the short-term and long-term outlook, we can see that the market is expected to be influenced by various economic indicators. The GDP growth rate is expected to slow down in the short term due to the current economic conditions.

The technical analysis suggests that the market may experience a correction in the short term, with a possible decline of 5-7% in the coming weeks. This is based on the analysis of the moving averages, which are indicating a bearish trend.

In the long term, the market is expected to recover and continue its upward trend, driven by the growth in the technology sector. The sector's growth is expected to be fueled by the increasing demand for cloud computing and artificial intelligence.

The moving averages are indicating a strong bullish trend in the long term, with a possible increase of 10-15% in the coming months. This is based on the analysis of the sector's performance and the overall market conditions.

The Bank of Japan (BoJ) has been sticking with expanding the monetary base until Consumer Price Index (CPI) levels exceed the targeted 2%.

This means the BoJ will continue to implement quantitative and qualitative monetary easing to boost the economy. The BoJ plans to review the various monetary easing measures that have stayed the same since the Japanese economy first fell into deflation in the late 1990s.

Economists forecast that Japan's Tertiary Industry Activity Index will increase by 1% in August after falling by 1.3% in July. This Index measures activity levels in Japan's services sector, which accounts for over 70% of GDP.

Better-than-expected numbers in the Index could signal a pickup in service sector activity, which could fuel expectations of a Q4 2024 Bank of Japan rate hike. Bank of Japan Board Member Tamura recently reiterated that the future rate path will depend on inflation and the economy.

Expert views suggest that Bank of Japan officials continue to uphold their hawkish bias, fueling the narrative of a potential rate hike coming before year end. This has led to the Japanese yen appreciating against 98% of the world's currencies since the beginning of the second half of 2024.

The BoJ's focus on the services sector, as seen in their review of monetary easing measures, indicates a shift in their stance towards a more hawkish approach. This could lead to a stronger Japanese yen in the long run.