USDJPY has had a strong rally since hitting annual lows just under the 140 level towards the end of last month and is now over 4% higher. Much of this move can be attributed to some strong unwinding of haven flows that pushed Yen higher against the dollar and on the crosses on the back of tariff updates and global growth concerns and some can be credited to a stronger greenback in the last week.
Adding to Yen weakness, the Bank of Japan kept rates on hold at the conclusion of their meeting last week and comments from Governor Kazuo Ueda that they will not be thinking about raising rates while they see inflation slowing led to a pull back in those rate hike expectations. Traders will continue to focus on geopolitical updates, particularly the ongoing trade talks between the US and Japan and while updates remain positive expect the Yen to continue to weaken, however any signs of discord could see a rush back to Yen and sharp corrections in the market.
USDJPY is now approaching longer term resistance on the Daily Charts with trendline resistance now sitting just above 147.50 and the 200-Day Moving Average at 149.83. Short Term support will come in around the 143.00 level, the start of the post Bank of Japan meeting rally with longer term support on the trendline around 140.20.
Resistance 2: 149.83 – 200-Day Moving Average
Resistance 1: 147.72 – Trendline Resistance
Support 1: 142.86 – 1 May Low
Support 2: 140.17 – Trendline Support
