USDJPY has seen plenty of volatility in the last few weeks as geopolitical concerns continue to dominate market sentiment and the Yen’s haven status sees sharp moves on a daily basis.
The pair has seen a 3.09% increase from trough to peak in the month of June, but the move has not been all one-way, and volatility has been high on geopolitical updates, particularly over the last week, with regard to the Israel-Iran conflict and then further after the US action.
The Bank of Japan kept rates on hold at 0.5% this week as expected, and guidance was measured given recent geopolitical updates, including US tariffs and conflict in the Middle East; however, the bank is still concerned that inflation is pushing higher, with the latest numbers coming in higher than expected again.
Like most central banks, the uncertainty around geopolitical events has them sitting between a rock and a hard place, and that could result in more volatility for the currency. Key inflation figures are due this week, and this could influence the bank’s stance; however, given the updates from the weekend, expect them to remain ‘sitting on the fence’ for the time being.
The pair has hit a new high in the recent session and looks like it could challenge that again in the short-term as the dollar gains back lost ground, with stronger resistance now sitting up on the 200-Day Moving Average at 149.64. Any pullbacks in the pair would see it drift back into recent ranges, with initial support now sitting on the trendline around 143.25.
Resistance 2: 149.64 – 200 Day Moving Average
Resistance 1: 146.76 – June High and Trendline Resistance
Support 1: 143.24 – Trendline Support
Support 2: 141.33 – Long-Term Trendline Support
