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Yen strengthens against dollar as USDJPY breaks key support
USDJPY fell more than 1% early in the week and traders focused on possible BoJ rate hikes in September after hawkish rhetoric.
The Japanese yen extended gains versus the US dollar, with USDJPY down over 1% in Asian and European trading early Monday as the pair tried to resume a sharp drop from last week.
Action Forex reports the yen was supported by a first round of intervention in late July, plus a hawkish shift in Bank of Japan rhetoric that signaled the possibility of a September rate hike. Economists expect a 25 basis point increase, but a 50 basis point move is also in play, adding to market appetite for yen longs.
Action Forex also pointed to USDJPY trading behavior around technical levels, saying the pair violated the 155.20 support zone and generated a bearish continuation signal. The outlet cited a break below 154.78 and outlined downside exposure to the 152.00 area, followed by 150.92, while noting the pair is in a bearish daily setup that is also oversold and near cloud support around 154.26.
Immediate resistance was identified at 154.78 and 155.20, with stronger upside capped ideally below the 156.50 to 157.5 zone to keep the larger bearish view intact, according to Action Forex.