The Japanese yen remains under pressure, trading near a five-month low against the US dollar. This trend is primarily driven by differences in monetary policy approaches.
On one side, the Federal Reserve maintains a hawkish stance, signalling a gradual slowing of monetary easing in 2025.
On the other, the Bank of Japan continues its cautious approach to policy tightening, as confirmed by a Reuters report published today. Although Japan’s Finance Minister issued warnings this week about potential market interventions, these statements have had little immediate impact.
According to technical analysis of the USD/JPY chart, the pair is trending within a well-defined upward channel (marked in blue) with the following notable developments:
→ In September, the psychological level of 140 yen per dollar served as strong support for bulls, while in December, this shifted to 150 yen per dollar (as indicated by arrows).
→ Since September, price movements have established a steeper upward channel (highlighted in purple).
→ The pair has now reached the median line of the longer-term blue channel, suggesting a potential for more stable trading. This stability may also be supported by reduced trading activity during the holiday season.
The current price action mirrors the conditions seen in summer 2024, when the pair steadily rose toward the critical level of 160 yen per dollar. As we enter early 2025, bulls may once again test this key threshold, seeking to push the pair higher.
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