USD/JPY is expected to trade within a ¥158.00–¥161.00 range next week, with the market centered on the ¥159 range and showing a slight downside bias. The key factors will be the FOMC minutes and developments in expectations for a BOJ rate hike.
USD/JPY is expected to trade within a ¥158.00–¥161.00 range next week, fluctuating around the ¥159 range with a slight downside bias. The key factors will be the FOMC minutes on the 19th and whether the BOJ delivers a message indicating a willingness to raise rates. Technically, resistance around ¥159.60 and the 160-day moving average at ¥160.01 could mark turning points for the market.
This week, USD/JPY rebounded from the upper ¥157 range to the ¥159 range as the yen weakened following the coordinated intervention by Japan and the United States. Although the pair briefly fell to around ¥158.43, the reaction was limited and it held in the ¥159 range. The market was shaped by a mix of movements in long-term US Treasury yields and concerns over the situation in the Middle East.
From a technical perspective, on a daily basis, the rebound is likely to be capped around ¥159.60, while the 100-day moving average at ¥160.01 is expected to act as resistance on the topside. If the pair breaks above this level, the 61.8% retracement around ¥160.64 and the 25-day moving average at ¥160.90 could form the next resistance zone. On the downside, the 38.2% retracement around ¥158.57 and the 200-day moving average at ¥158.21 are important support levels. A break below this zone could prompt another test of the ¥157 range.
Key economic indicators and events scheduled for 17–21 August are among next week’s market events. While the OIS market is increasingly pricing in roughly a 70% probability of an additional BOJ rate hike in September, the yen’s reaction could be determined by whether the BOJ delivers a supportive message.