Is it going to be the same story again for the USDJPY?
In 2022, the USDJPY climbed to reach just below 152 before turning down to the 128 support level. The similar price movement played out in 2023 as the USDJPY rose from the 128 support level to retest the 152 resistance level.
The USDJPY has reversed down to the 140 price area (50% Fibonacci retracement level), primarily due to the weakness of the DXY as markets began to price in rate cut scenarios from the US Federal Reserve. This move lower was also due to rumors that the BoJ could end its ultra-loose monetary policy at the December 2023 meeting.
However, the BoJ has so far maintained its current policy stance as it continues the fight to bring inflation down to its 2% target level.
The longer the BoJ persists with its negative rates regime in 2024, this could continue to bring weakness to the Yen. Combined with some retracement on the DXY, the USDJPY could retest the 143-144 price area (38.2% Fibonacci retracement) in the short term.
Look for the BoJ to signal a plan for policy normalization in 2024, to lead to further downside.
However, it'll be crucial for the USDJPY to break below the 138-round number support and 61.8% Fibonacci retracement level before we can see a significant downside to the 128-support level again.
In 2022, the USDJPY climbed to reach just below 152 before turning down to the 128 support level. The similar price movement played out in 2023 as the USDJPY rose from the 128 support level to retest the 152 resistance level.
The USDJPY has reversed down to the 140 price area (50% Fibonacci retracement level), primarily due to the weakness of the DXY as markets began to price in rate cut scenarios from the US Federal Reserve. This move lower was also due to rumors that the BoJ could end its ultra-loose monetary policy at the December 2023 meeting.
However, the BoJ has so far maintained its current policy stance as it continues the fight to bring inflation down to its 2% target level.
The longer the BoJ persists with its negative rates regime in 2024, this could continue to bring weakness to the Yen. Combined with some retracement on the DXY, the USDJPY could retest the 143-144 price area (38.2% Fibonacci retracement) in the short term.
Look for the BoJ to signal a plan for policy normalization in 2024, to lead to further downside.
However, it'll be crucial for the USDJPY to break below the 138-round number support and 61.8% Fibonacci retracement level before we can see a significant downside to the 128-support level again.
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