Aiming for 150! Why Did the USD/JPY Suddenly Surge?

Summary:

Deputy Governor of the Bank of Japan, Ryozo Himino, emphasized the need to continue raising interest rates but stated that the central bank would not take hasty actions due to uncertainties in the global economic outlook.

BUY USDJPY

Close Time

CLOSED

148.598

Entry Price

151.000

146.600

159.404 +0.619 +0.39%

176.3

Pips

Loss

146.600

146.835

Exit Price

148.598

Entry Price

151.000

Fundamentals

The trade agreement between Japan and the United States helps alleviate economic uncertainties, but the specific impact of US tariffs remains unclear. The risk of the pandemic impact exceeding expectations deserves more attention. Overall, the global economy continues to face high levels of uncertainty. Deputy Governor of the Bank of Japan, Ryozo Himino, emphasized the need to continue raising interest rates but stated that the central bank would not take hasty actions due to uncertainties in the global economic outlook. He stated that Japan's inflation outlook faces both upside risks from tight labor market conditions and downside risks from a global slowdown and the impact of US tariffs. The central bank expects that Japan's core inflation will eventually stabilize at levels consistent with the 2% target after a brief pause. However, the timing of interest rate hikes remains subject to observation.

The US manufacturing sector contracted for the sixth consecutive month in August, indicating that tariffs and policy uncertainty continue to weigh on industrial activity. The Institute for Supply Management (ISM) reported that its manufacturing PMI edged up to 48.7 from July's 48.0, yet remained below the threshold of 50, indicating overall contraction in the sector. Most industries reported a decline in business, with manufacturers widely citing tariffs as driving up costs for components and raw materials. This has eroded the competitiveness of "Made in the USA" products and forced companies to freeze investments and hiring. Some firms even perceive the current environment as more challenging than during the previous economic downturn. Despite pressures on production and employment, the ISM new orders sub-index rose to 51.4 for the first time in six months, indicating localized demand improvement. However, the report also emphasized that positive expectations remain insufficient to offset the widespread uncertainty stemming from tariffs. Affected by the data release and disputes over tariff legitimacy, Wall Street stocks declined as investors shifted toward safe-haven assets like the dollar and Treasury bonds. The dollar strengthened against a basket of currencies while US Treasury yields climbed. Analysts noted that this trend indicates the market is increasingly betting that weakness in US manufacturing will prolong the high-cost environment, thereby supporting the dollar.

Technical Analysis

From the 4-hour chart perspective, the USD/JPY has been oscillating between the upper and lower Bollinger Bands and is currently consolidating near the middle Bollinger Band. After the MACD formed a golden cross, its MACD line and signal line moved above the zero axis. The RSI reading is 63, indicating a strong upward trend and suggesting market optimism for further gains. If the price remains firmly above the middle Bollinger Band, it is likely to test key resistance levels near the integer level and the previous high, at 150 and 150.92, respectively. Conversely, if it fails to hold above this level, it may decline to around 145.8. From the weekly chart perspective, the Bollinger Bands are narrowing, with the price fluctuating around the middle Bollinger Band. After the MACD formed a golden cross, its MACD line and signal line retraced to near the zero axis. The RSI reading is 54, hovering around the midline, indicating a predominantly sideways trend with the potential for a breakout. Moving forward, it is crucial to monitor whether the price can hold above the middle Bollinger Band. A successful hold could lead to an upward breakthrough toward 150, while a failure may result in a decline to around 146. For the strategy, it is recommended to go long at lows.

Aiming for 150! Why Did the USD/JPY Suddenly Surge?_1

Aiming for 150! Why Did the USD/JPY Suddenly Surge?_2

Trading Recommendations

Trading direction: Buy

Entry price: 148.6

Target price: 151

Stop loss: 146.6

Support: 145.8, 142.6, 141.6

Resistance: 149.6, 150, 151

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