The USDJPY pair is at the highest annual levels, testing the strong resistance of 145.00.
The pullback from the strong level comes amid traders' caution about possible currency intervention.
Japan's low yields made the national currency a convenient target for short sellers and financial operations. At the same time, the interest rate gap between Japan and the United States has led to persistent weakness of the yen.
The Japanese currency has decreased about 20% since the Fed began the quick rate hike to fight the rising inflation in March 2022. In the meantime, the Bank of Japan remains in a very supportive stance.
The land of the rising sun intervened in the pricing of the yen last September when the dollar rose above 145.00. This prompted the Ministry of Finance to buy the yen and brought the pair back to around 140.00. The USDJPY is up over 9% for the year.
Traders expect probable intervention from Japanese officials soon as the yen fluctuates near this level again.
At the same time, U.S. bond yields rose, lifting the dollar to its highest level since July 7. That came after Friday's data showed manufacturing prices a slight increase in manufacturing prices for more than they were expected in July. The cost of services rose at the fastest pace in a year.
Consumer sentiment in the U.S. deteriorated in August. However, Americans expect lower inflation in the coming year and in the future. This data was shown by a survey conducted on Friday.
This week, the publication of the minutes of the Fed meeting is expected. The documents may help markets to adjust expectations regarding future interest rates.
The USDJPY currency pair forms an uptrend on the H1 timeframe. The price collision with the strong resistance of 145.00 increases the likelihood of quotes correcting to the ascending support.
Signal:
Short-term prospects for the USDJPY pair.
Target is at the level of 144.20.
Part of the profit should be fixed around the level of 144.65.
Stop-loss is around the level of 145.50.
The bearish trend is short-term, so choose a trading volume of no more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
