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market analysis
149.53 becomes the key defense line, and the upward action energy of the US dollar against the yen weakens
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: 149.53 becomes the key defense line, and the upward action of the US dollar against the Japanese yen can weaken." Hope it will be helpful to you! The original content is as follows:
On Thursday (July 31), the US dollar against the Japanese yen fell slightly from its stage high, and trading around the 149.30 line during the European period. Although the Fed kept interest rates unchanged and released hawkish signals on the previous trading day, the US dollar strengthened in the short term, the double boost of wording after the Bank of Japan's policy meeting and economic data made the yen stronger in the short term, putting pressure on the exchange rate. Overall, the US dollar and the Japanese yen show a consolidation trend under the game of multiple macro factors, while the technical side is approaching the key resistance area.
Fundamentals
The Bank of Japan (BoJ) maintained the policy interest rate unchanged in its July interest rate resolution, and the short-term interest rate target remained in the range of 0.40%-0.50%. This is the fourth consecutive meeting of the bank suspending interest rate hikes, continuing its wait-and-see attitude since the beginning of the year. Nevertheless, the central bank raised its inflation expectations, raising its core CPI forecast for fiscal 2025 from 2.2% to 2.7%, suggesting that there may still be room for policy tightening this year.
Central Bank Governor Kazuo Ueda said at a press conference after the meeting that Japan's economy is recovering moderately, and Japan's trade agreement with the United States has reduced macro uncertainty. Meanwhile, industrial output in June increased by 1.7% month-on-month and retail sales increased by 2.0% year-on-year, showing the resilience of domestic demand. These positive signals further consolidate the Bank of Japan's subsequent interest rate hike expectations and support the strengthening of the yen.
In the United States, although the Federal Open Market www.xm-forex.committee (FOMC) kept interest rates unchanged this week, Chairman Powell said that the current policy is still moderately restrictive and it is not appropriate to conclude a rate cut in September. The number of ADP employment in the United States increased by 104,000 in July, exceeding expectations, with an annualized GDP growth rate of 3.0%, significantly better than the previous value, and economic fundamentalsStrong support the dollar.
However, as Japan's data improves and expectations of interest rate hikes heat up, the short-term rise of the US dollar against the Japanese yen is suppressed, and the market is waiting for further guidance from the PCE price index during the North American period.
Technical:
From the daily chart, the exchange rate of the US dollar against the Japanese yen is currently below the upper track of the Bollinger Band (150.373), and once approached the high point of 149.532 during the day, forming short-term resistance suppression. From the perspective of the K-line pattern, several consecutive positive lines have pushed the price to near the previous high, and the short-term rise tends to overheat, approaching the technical overbought area.
The MACD indicator continues to run above the zero axis, with the fast line (DIFF) being 0.908, which is higher than the slow line (DEA) being 0.784. The RSI (14) indicator is at 63.10. Although it has not yet entered the typical overbought zone (above 70), it is already at a relatively high level. www.xm-forex.combined with the resistance of the high point 149.532, the short-term technical pullback pressure is accumulating.
Support analysis believes that strong support is near 146.711, the middle rail of the Bollinger Band; but if the price breaks through 149.532 and stands firm, it will open upward space to 151 and the previous high of 151.207; on the contrary, if it is blocked and falls below the 149 mark, it may trigger short-term technical adjustments.
Preview of Market Sentiment:
Recent market sentiment has differentiated between the strong US dollar economic data and the Bank of Japan's partial eagle statement. On the one hand, US macro data has continuously exceeded expectations, which has increased the market's confidence in a "soft landing" and the US dollar bulls are still resilient. On the other hand, although the Bank of Japan did not raise interest rates, it raised inflation expectations and economic assessments, causing short yen to start taking profits.
At the same time, the exchange rate at the technical level is approaching key resistance, MACD momentum weakens, RSI enters a high-level area, some traders have begun to reduce positions and wait and see, and the market has entered a short-term bull and short stalemate.
From the perspective of the options market, the implicit volatility has risen, reflecting the intensification of uncertainty about the future exchange rate direction. In light of recent political turmoil in Japan and the unclear path of medium- and long-term inflation, the current market sentiment is more cautiously optimistic.
The above content is all about "[XM Foreign Exchange Decision Analysis]: 149.53 becomes the key defense line, and the action on the US dollar against the Japanese yen can weaken". It was carefully www.xm-forex.compiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some content in the article still needs to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues:
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