USDJPY is consolidating next to ~151.945 – an all-time high for the currency pair following the emergency meeting held by the Japanese monetary authorities.

Despite the Bank of Japan’s (BoJ) anticipated move away from negative interest rates, the Japanese yen continues to weaken, raising the possibility of government intervention.

The Finance Minister of Japan has not ruled out taking action to address erratic foreign exchange movements.

Moreover, several institutional entities have indicated a strong probability of governmental interference.

While a depreciating yen could be advantageous for exporters, it risks escalating import costs, potentially thwarting Japan’s objective of achieving a 2% inflation rate.

Additionally, the uncertainty surrounding U.S. interest rates is exerting pressure on the USD/JPY exchange rate.

Presently, the market suggests there is approximately a 63% likelihood of a rate reduction.

However, forthcoming economic indicators pointing to greater-than-anticipated inflationary pressures could influence the Federal Reserve to maintain elevated interest rates for an extended period.

Should this transpire, the U.S. dollar may fortify against its counterparts, including the yen.
 

On the technical side …

From a technical perspective, the USD/JPY is trading within a consolidation pattern above critical simple moving averages (21, 50, and 100-period SMA), indicating a potentially robust bullish momentum.

The pair’s proximity to a record high (~151.945) potentially signals positive market sentiment, with the possibility for further gains if the bullish trend continues.

Conversely, the recent sharp ascent over the past two weeks could hint at a forthcoming technical correction.

The Relative Strength Index (RSI) remains below the overbought threshold of 70, reflecting the current consolidation phase and the possibility of both upward and downward movements.

The all-time high (~151.945) could serve as a significant resistance level and surpassing it might catalyze additional upward progression for the USD/JPY.

On the downside, the ~151.024 level may offer immediate support.

Moving below it may create an additional downward pressure with the potential for USDJPY to move towards the next key support level at 21-period SMA.

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