The recent movements in the USDJPY pair have been influenced by a combination of fundamental and technical factors. The dovish speech by the Fed Chairman has created a bearish sentiment for the dollar, with expectations of a rate cut in September leading to increased bond purchases and lower yields.
On the other hand, the Bank of Japan’s intervention in the forex market has also impacted the pair, with a liquidity outflow of 2.74 trillion yen related to government transactions. This intervention occurred on Thursday and Friday, July 11 and 12, leading to a trend change in the pair.
From a technical perspective, the USDJPY pair has seen a sharp decline on July 17, with support at 156.09 and a volume concentration at 156.43. A correction is expected in this zone, with a target at the broken support of 157.16 before potentially moving towards the June support at 154.56.
It is important to pay attention to the supply zones at 157.90, 158.56, and 159.18, as well as the demand zones at 156.43 and 155.81. The bearish scenario will remain valid as long as the correction does not exceed the resistance at 158.85.
Overall, traders should consider the impact of both fundamental factors like Fed policies and Bank of Japan interventions, as well as technical levels and zones when making trading decisions in the USDJPY pair. Keep an eye on potential entry points and set stop-loss levels accordingly to manage risks effectively.