Yen may be due for a bigger jump
Japan's currency has seemed little moved by official efforts to halt its slide this year, but a look at past price patterns suggests a much bigger strengthening move could still be coming. One t...
Japan's currency, the yen, has shown limited reaction to government efforts to stabilize it throughout the year. However, examining historical price trends indicates that a more substantial appreciation of the yen could still be on the horizon. Technical analysts often rely on historical patterns to forecast future currency movements, and the yen's past behavior may prove particularly valuable in this situation.
In past instances, Japanese interventions have generally led to an immediate rise in the yen's value against the dollar, followed by a gradual decline back towards weakness. Yet, in many of these historical episodes, a significantly larger yen rally has emerged, occasionally surprising investors.
Given that the yen is typically quoted in yen per dollar, a downward trend on its price chart signifies the Japanese currency gaining strength. Conversely, a rising line suggests the yen is weakening. Currently, with the dollar recovering against the yen since the latest intervention in late July, the yen appears relatively resilient near 159.60, the midpoint of the most recent intervention-driven decline from July's peak of 163.99 to a low of 155.20.
This midpoint often acts as a critical support level for market prices, and hesitation before reaching a significant round number, such as 160, may also be noteworthy for traders. The hesitation observed thus far leaves the dollar potentially vulnerable to falling below support at 158. A breach of this level could pave the way towards 155, then the year's low of 152.10, and possibly even lower to 149.
This price level has previously left an empty gap on the chart in October, which some traders anticipate will eventually be filled.
Potential support for a yen rally could arise from surprise US Treasury bond buyback plans, which have buoyed the dollar broadly and consequently weakened it. If the dollar were to climb back above 159.60 and subsequently 160, it would indicate potential yen weakness towards 164. However, persistently high oil prices, which generally harm the yen, could contribute to a reversal of this trend.
Written by urgent.news from Gulf Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
