Usdjpy Trades Low On Risk Aversion

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Usdjpy Trades Low On Risk Aversion

Usd/Jpy Trades Near 160.50 On Risk Aversion

The USD/JPY is currently trading near 160.50 with a bearish bias as risk aversion has once again hit the market. Additionally, the uplift of the average earnings in Japan was also taken positively by the Japanese Yen, which is now on a recovery drive.

Amidst all of this, investors are also worried about the Ministry of Finance's intervention in the FX markets. In the past, such interventions have led to flash crashes in the USD/JPY pair & the same could happen again.

Boj Might End Its Bond Buying Program

According to experts, any announcements from the BoJ about rate hikes or ditching the bond-buying program will lessen the chances of market intervention.

For now, the USD/JPY is poised towards the downside as all the indicators are in favor of the Japanese Yen. So if the BoJ signals additional rate hikes, it will be yet another plus for the JPY which is still at multi-year lows.

The technical analysis of USD/JPY shows that RSI on the D1 chart is in the overbought territory. So, even that points to a possible correction in the USD/JPY pair, sending it towards 160.00, 159.80, and then 159.50. Next up is the 55 EMA near the 157.03 handle followed by 154.26 where the 100 SMA is located.

Meanwhile, the DXY has not been doing that great since the release of the NFP report, which showed a weak labor market and a higher unemployment rate. Additionally, all of the recent data was also soft or below the forecasts, which is a sign of economic slowdown in the USA.

So, for the first time in almost several months, the odds are now in favor of the JPY against the USD. That's why we can safely say that the USD/JPY will likely head downwards as the JPY recovers from historic lows. However, the appreciation seen in the JPY is still only for the short term as the Japanese economy faces major headwinds.

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