The USD/JPY appreciates for the second consecutive day, achieving session highs exceeding 153.30. Market volatility remains subdued as investors anticipate significant macroeconomic events in the latter half of the week. The technical picture indicates a moderate bullish pressure, targeting the 160.00 area. In a low-volatility market on Tuesday, the Japanese yen is still defensive versus the US dollar as investors wait for important data releases and the Jackson Hole symposium, which is scheduled for the second half of the week, to make choices. The USD/JPY pair extends gains to levels past 159.30 at the opening of the European session, drawing closer to the key 160.00 level.
Investors’ apprehensions regarding potential interventions are constraining declines in the Yen. However, the combination of worries surrounding Japan’s fiscal stability and the disparity between the interest rates set by the Bank of Japan and those of other major central banks is presenting a significant obstacle to Yen appreciation. Volatility, conversely, remains comparatively subdued, as markets anticipate the forthcoming release of the US Personal Consumption Expenditures Price Index figures, scheduled for Wednesday, and, more significantly, the address by Federal Reserve Chairman Kevin Warsh at Jackson Hole on Friday.
The market will be keen to assess the implications of the US Treasury’s bond repurchasing plans on the bank’s monetary policy and to evaluate Warsh’s commitment to combatting above-target inflation. USD/JPY is currently positioned at 159.32, reflecting a pattern of ascending lows and highs since reaching a low around 155.20 in early August, as bullish sentiment targets the 160.00 mark. Momentum indicators in the 4-hour chart exhibit a moderately positive stance, with the Relative Strength Index (14) positioned at approximately 58, and the Moving Average Convergence Divergence histogram displaying an expansion of green bars, collectively indicating that bullish sentiment prevails.
Initial resistance is observed in the range between the August 18 high, at 159.75, and the 160.00 level, which is regarded as a potential catalyst for a Tokyo intervention. Further up, the July 31 high, near 160.90, would come into focus. On the downside, an improbable bearish reversal would be tested at the low of 158.10 on June 19, ahead of the low of 156.70 on August 7 and the previously indicated post-intervention low of 155.23.
