USD/JPY jumped to 133.78, a level not seen in 20 years since April 2002 and traders would be inclined to a bullish rally if the pair closes above 133.0 for the day.
High buying interest after price hike at 126.Yen weakens on inflation, yen drop stimulates purchases of dollars against other currencies, keeping concerns about steadily rising inflation.
The yen rate depends on the difference between the U.S. bonds and the Japanese debt interest rate.
U.S. 10-year bond yields rose 3 basis points, with the lag between 10-year U.S. and Japanese debt holding at 277 basis points, contributing to the dollar jumping to a 20-year peak of 133.47 yen, with the yen losing about 5 percent against the dollar in the last eight trading sessions.
“When yields change, the dollar and yen exchange rates change, so the price movement looks a little sharp,” said Danske Bank Senior Analyst Lars Sparreso Lykke Merklin.
USD/ JPY 1m chart
By Tradingview
The 20- and 40-day simple moving averages (SMAs) changed direction to upward The RSI, or “Relative Strength Index” is in overbought territory. The MACD indicator continues its upward movement above the trigger and zero lines.
If the day closes above 133.00, the next stop could be somewhere between the February 2002 point of 135.15 and resistance at 146.80.
If the market goes down to below the short-term SMA at 128.80, sellers might increase the pressure.Then the 23.6% Fibonacci retracement level of the upside from 113.40 to 133.30 might be violated, which would probably lead to a decline to 126.30.
In other words, if the price overcomes the peak today, the probability of further USD/JPY rising increases, and conversely, a drop below the short-term SMAs would give rise to a neutral outlook.
The BoJ is likely to maintain its soft rate policy, and the Fed is planning a 50 point interest rate hike next week.
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