As of Tuesday, the USD/JPY outlook signals a bullish trend, fueled by the beaten yen, struggling near a three-decade low against the dollar. This weakness is mainly due to the Bank of Japan’s (BOJ) easy monetary policy. This policy clashes with the likelihood of prolonged higher rates elsewhere.

Notably, the yen was at 151.70 against the dollar, hovering near Monday’s one-year low of 151.92. Meanwhile, on Monday, the yen briefly rose against the dollar after reaching a year-to-date low. However, analysts attribute this to active trading in options expiring this week rather than any intervention by Japanese authorities. 

Additionally, options and concerns about potential BOJ intervention could continue to stop the dollar/yen pair from climbing.

In September of the previous year, Japanese authorities intervened in the market for the first time since 1998. Consequently, the yen got a boost after its decline due to the BOJ’s decision to maintain its ultra-loose monetary policy. Moreover, the BOJ intervened again in October 2022 when the yen hit a 32-year low of 151.94.

This year, the BOJ has made gradual steps to phase out its controversial yield curve control (YCC) policy. Moreover, there have been hints of an upcoming end to negative interest rates. However, these measures have not significantly sustained a yen rally. This is especially true as central banks worldwide maintain a hawkish stance with the expectation of enduring higher rates.

USD/JPY key events today

Investors are eagerly awaiting the US inflation report, which will include the following components,

• Core CPI (MoM) (Oct)
• CPI (MoM) (Oct)
• CPI (YoY) (Oct)

USD/JPY technical outlook: Price poised for a potential 30-SMA retest.

(Click on image to enlarge)

USD/JPY 4-hour chart

On the technical side, the USD/JPY price is bullish and trades above the 151.51 key level. Supporting the bullish bias is the fact that the price sits above the 30-SMA and the RSI above 50. However, bears have shown some strength with a strong bearish candle. 

The price briefly dipped below 151.51 before pulling back. If bears get stronger, the price might soon retest the 30-SMA support. Still, given the bullish bias, it will likely bounce higher to take out the 152.01 resistance level.

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