August 17, 2022 9:52:04
The Japanese Yen has struggled against the U.S. dollar since the week started, it is the worst performing G10 currency on Wednesday. A rebound in the greenback, global recession fears, and heightened Yen supply led the movement in the pair.
The U.S. dollar index remains stable near 106.50 with mild gains of 0.07%. The 10-year U.S. benchmark treasury yields rose 1.67% to 2.87.
Investors remained invested in the greenback as the global recession fear mounted over disappointing Chinese and U.S data. In addition, the Japanese economy grew 0.5% in Q2 as compared to the market expectations of 0.6%.
Further, the Bank of Japan maintained an ultra-easy monetary policy in its July meeting while other central banks are racing ahead with jumbo rate hikes to curb skyrocketing inflation. As inflation is not the major concern for the Japanese central bank. Despite being just above the 2% target, it is still low compared to other developed economies.
As of press time, USD/JPY is exchanging hands at 134.82, up 0.46% for the day.
USD/JPY aims for 136.0
On the daily chart, the USD/JPY pair formed an inverted flag pattern, a bearish continuation pattern. However, the price took support at the 21-day exponential moving average.
The previous two green candlesticks indicate the presence of buyers near the lower trend line of the formation.
We expect the price to test the upper trend line near the 136.00-136.50 zone. Investors could be cautious around these levels.
The MACD trades below the midline with a bullish crossover. Any uptick in the indicator could bring gains in the price.
On the flip side, a daily close below the session’s low of 133.90 would open the gates for the lower level toward 132.50.
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