The Japanese yen has strengthened against the US dollar, with the USD/JPY pair hitting a new yearly low.
This decline was triggered by comments from a Bank of Japan official, suggesting that the central bank may continue raising interest rates to combat inflation. Junko Nakagawa stated that the BoJ would adjust its monetary policy to ensure that inflation reaches its 2% target sustainably.
Technical Analysis
- Descending Channel: The USD/JPY pair has been trading within a descending channel since early August.
- Support Level: The price has recently fallen to the median of this channel, which has historically provided support.
- Resistance Shift: The 143.7 level has transitioned from a support level to a resistance level, indicating a bearish trend.
- Price Position: The price is currently below the Resistance 1 trendline.
Upcoming Volatility
The release of the US Consumer Price Index (CPI) at 15:30 today is expected to increase market volatility. If the CPI data comes in hotter than expected, it could put upward pressure on the US dollar and lead to a rebound in the USD/JPY pair.
However, given the current bearish sentiment, there is a risk that the rate could continue to decline, potentially reaching the psychological level of 140 yen per dollar.
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