During the week of August 19 to August 23, 2024, the USD/JPY currency pair experienced a relatively stable trading range, influenced by both fundamental and technical factors.
Fundamental Analysis:
The primary driver for the USD/JPY pair during this week was the ongoing divergence in monetary policies between the Federal Reserve (Fed) and the Bank of Japan (BoJ). The Fed’s continued hawkish stance, bolstered by strong U.S. economic data, supported the U.S. dollar, while the BoJ maintained its ultra-loose monetary policy. This divergence created a bullish sentiment for the USD/JPY pair, keeping the yen under pressure.
Additionally, Japan’s economy showed modest growth, with GDP data for Q2 2024 revealing a 0.8% expansion, which slightly exceeded market expectations. However, this was not enough to significantly strengthen the yen, as the BoJ’s policies remained focused on stimulus rather than tightening, unlike other major central banks.
Technical Analysis:
Technically, the USD/JPY pair traded within a narrow range but displayed a bullish bias. On the daily chart (D1), trend indicators predominantly pointed upwards, with resistance levels observed around 148.20 and 149.35. The support levels were marked at 146.55 and 145.39. The market showed little volatility, suggesting a consolidation phase, but with a potential breakout if the dollar continued to strengthen against the yen.
Outlook:
The outlook for the pair was cautiously bullish, with traders closely watching any developments in U.S. economic data and comments from both the Fed and BoJ. The stability of the yen largely depended on domestic economic indicators and any signs of change in the BoJ’s policy stance, which, if it happened, could lead to a reversal in the USD/JPY trend.
In summary, the USD/JPY pair saw limited but positive movement for the dollar, supported by the Fed’s hawkish outlook and Japan’s continued accommodative monetary policy.
Thomas is a market analyst and self trader serving the community with his analysis and educational content from long time. The author has great exposure to different financial markets. He’s well-known for his day trading reviews and multiple timeframe analysis.
