Date: May 6, 2025
The US Dollar (USD) against the Japanese Yen (JPY) has likely entered a consolidation phase, as highlighted by the FX analysts at UOB Group, Quek Ser Leang, and Peter Chia. Their analysis predicts that the pair will trade within a broader range of 142.20 to 146.70 in the near term, driven by prevailing market conditions.
Short-Term Outlook
Over the last 24 hours, USD/JPY experienced a dip to a low of 143.52, closing at 143.70 with a decline of 0.85%. Despite the downward movement, there is no clear evidence of an increase in bearish momentum. Oversold conditions suggest the pair is likely to remain within a range, with immediate support at 143.40 and resistance at 144.85.
Key Points:
Yesterday’s price action is consistent with range trading behavior.
No strong directional momentum is observed in the short term.
Oversold market conditions indicate stabilization within the defined range.
Medium-Term Analysis
The rebound from the late April low of 139.86 exhibited strong upward momentum initially. However, this momentum has tapered off, signaling a phase of consolidation. Analysts expect the pair to trade within a broader range of 142.20 to 146.70 in the coming weeks. This range reflects a balance between bullish and bearish forces, with traders watching closely for breakout signals.
Key Levels to Watch:
Support Levels: 143.40 (short-term), 142.20 (medium-term).
Resistance Levels: 144.85 (short-term), 146.70 (medium-term).
Market Factors Influencing USD/JPY
Several factors contribute to the current consolidation phase:
US Economic Data: Recent economic reports from the United States have shown mixed results, influencing the US Dollar’s strength. Market participants are awaiting further data to gauge the Federal Reserve’s monetary policy direction.
Bank of Japan’s Policies: The Bank of Japan’s dovish stance continues to exert downward pressure on the Yen, supporting the USD/JPY pair within its defined range.
Global Sentiment: Risk sentiment in global markets remains cautious, contributing to range-bound activity for safe-haven currencies like the Yen.
Technical Analysis
From a technical perspective, key indicators suggest consolidation:
Moving Averages: USD/JPY remains near its 50-day moving average, indicating a lack of strong directional bias.
Relative Strength Index (RSI): The RSI is near neutral levels, reinforcing the consolidation narrative.
Fibonacci Levels: Resistance at 144.85 aligns with the 61.8% Fibonacci retracement level, while support at 143.40 corresponds to the 50% retracement.
Conclusion
USD/JPY is expected to trade within the 143.40 to 144.85 range in the short term, with a broader consolidation band of 142.20 to 146.70 in the medium term. Traders should monitor key economic indicators and central bank communications for potential breakout signals.
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