Japanese Yen Forecast: More Bearish Movement Expected In Near Future

Japanese Yen Forecast: More Bearish Movement Expected In Near Future

March 2, 2023 0 By Wiley McDermott

Hawkish Fed propelled USD/JPY and other yen crosses remained higher due to the strong US macro data.

Technically speaking the inability to consistently surpass the significant level at 135.00 may indicate the need for careful consideration before anticipating additional increases.

Moreover, experts are also discussing that bullish traders are currently being favored due to the recent breakout above the 50-day Simple Moving Average (SMA).

This favor came after the strong horizontal barrier of 132.90-133.00. In upcoming events market might see a clear dip in buying trend regarding JPY.

Additionally, the daily chart fluctuations are maintaining a comfortable position in the positive range.

The technical indicators show that the Japanese Yen is currently standing far from being an overbought region.

JPY needs to maintain its Level above 135 Mark

As of now, JPY is heading toward a bearish momentum. For USD/JPY it is important to hold the current level of resistance above 135 rounds in order beat the bears.

If USD/JPY held the current level above 135 level it might soon see bullish momentum in terms of its price.

Resistance at the 135 mark shows that the next level of resistance for the pair will come at around 136 level.

Conversely, the immediate downside appears to be safeguarded by the lower limit of the weekly range, specifically in the 134.00-133.90 region.

Some Investors Are Waiting For JPY to Go Down

Some investors are waiting for JPY to go further down below the current level. This would allow them to buy JPY at a lower price and later on sell the JPY when it will reach a higher mark.

But those investors will be indulging them in immensely risky trade. The Bank of Japan officials have warned that the current money market is highly volatile.

The current extreme moves in the FX market are destroying all the fiat currencies except USD.

Japanese government officials have already made it clear that rapid declines in the price of JPY are coming. They are certain that JPY is entering a strong bearish hold.

Country’s Finance Minister Shunichi Suzuki said that “Government will take all the necessary steps to give yen the strength amid yen’s decline to a new 24-year low compared to the dollar.”

The statement was made by the end of last week’s trading period. This sends a clear signal that the Japanese Feds might intervene to prevent the JPY from further devaluation.

All these indicators clearly show that investment in JPY is highly risky. Experts are unanimously arguing that current market volatility is at three years peak level.

These abrupt moves in the price of fiat currencies can have adverse effects on the global economic and financial markets.

Hence, the Feds have to deal with the current situation in an appropriate manner. Currencies need to achieve stability and prices should be revolved around their technical indicators.

The government will monitor fluctuations in the exchange rates with great urgency due to the recent increase in volatility in the currency market.

The Feds have to closely monitor the price of yen. Moreover, the strong USD is another main reason that JPY is going further and further down. As of this writing, the USD is standing at a 24-year high against the JPY.

As U.S Feds are hawkish and very aggressive about the further increase in interest rate, this would give the USD more strength against JPY and all other currencies.

In the early trading round of the Asian market, the USD stood at the 140.02 mark.

The government’s verbal cautions did not affect investors much as the current depreciation of the yen is consistent with the country’s economic fundamentals. The yen will probably experience a further decline and reach 142 yen.

The act of selling dollars or raising interest rates by the Bank of Japan would have minimal impact on changing the situation at this point. As things stand investors need to stay away from making investments in JPY.