USD/JPY 240 Minute Chart Analysis – 2023-10-26

USD/JPY remains robust in the Asian trading session, following a move to 150.32 in late New York trading on Wednesday. The currency pair exhibited a range from 150.04 to 150.47, with a focus on potential consolidation above the significant 150.00 level. There appears to be little immediate concern regarding actual foreign exchange (FX) intervention in Tokyo, although verbal intervention is not ruled out. Firm US yields, particularly at the long end of the curve, are providing support, with 10-year Treasury yields reaching 4.963%.

As is often the case during USD/JPY rallies, JPY crosses are under pressure. This is partly due to a reflection of flows, with the market’s focus shifting back to the US dollar, diminishing cross flows. Key JPY crosses include EUR/JPY trading within the range of 158.51 to 158.70, GBP/JPY at 181.46 to 181.92, and AUD/JPY between 94.80 and 94.20. AUD/JPY is facing selling pressure after yesterday’s rally, prompted by comments from RBA Governor advocating a hold.

Japan’s September Corporate Service Price Index (CSPI) increased by 0.1% month-on-month and 2.1% year-on-year, consistent with August figures.

USD/JPY has breached the 150.00 mark late in New York trading on Wednesday, and while the price action has been somewhat heavy and choppy, the consensus in Tokyo is that USD/JPY might trade at a higher level for some time without the immediate prospect of FX intervention. Throughout most of October, USD/JPY remained below 150.00, primarily due to concerns about potential FX intervention, offers from Japanese exporters, and option-related gamma plays. With no rush to push USD/JPY higher, there is currently no indication of actual FX intervention. Japanese officials’ comments about monitoring currency levels with a “sense of urgency” appear to be more symbolic of their desire for currency stability than a signal of imminent intervention. Given these factors, the bullish bias for USD/JPY appears poised to continue as long as US interest rates maintain an upward tilt. If this uptrend remains gradual and orderly, there is a belief among some market participants that USD/JPY could even target 155, which could be the next level to watch for potential Japanese FX action.

From a technical perspective, USD/JPY is currently trading at the 150.380 level, positioned above both the 50-day and 200-day moving averages. This indicates a bullish range momentum.

Scenario 1: Price has the potential to continue its upward movement, testing the 150.640 level. If bullish sentiment persists, further advances may lead to tests of the 150.868 and 151.217 levels, corresponding to the top of resistance level 1. The highest resistance levels are at 151.256 and 151.500.

Scenario 2: Alternatively, price might retreat to test the 149.825 level. A successful test could result in further downward momentum towards the 149.515 level, followed by support levels at 149.274 and 148.913.

While the market currently demonstrates bullish range momentum, a potential pullback from recent highs suggests that the market is overbought. Additionally, the Relative Strength Index (RSI) is approaching the overbought region.