USDJPY Analysis

Introduction

The USD/JPY is one of the most traded pairs and is influenced by US interest rates, Japanese economic performance, and geopolitical risks in East Asia. The Japanese Yen is often viewed as a safe-haven currency, and the USD/JPY may appreciate in times of global risk appetite or vice versa. The price of the pair is impacted by Japan’s export market, including technology and automobiles. The USD/JPY tends to have an inverse correlation with gold, as investors flock to safe-haven assets.

Fundamentals and Interest Rates

The Federal Reserve policy is Dovish with the (FED) current Interest rate 4.5%. Latest change was Dec 18, 2024 (-25bp)%.
On that side the Bank of Japan policy is Hawkish and (BOJ) has set its interest rate to 0.5% by latest change, Jan 24, 2025 (25bp).
(FED) Higher interest rates generally lead to higher returns on investments denominated in USD. This tends to attract foreign capital into USD assets.

Based on the economic and macro fundamental data, The Fundamental Bias of USD is Moderate Bearish and for the JPY is Weak Bullish.
Ziwox considering Moderate Bearish bias for this asset and we expect prices to decline in the long-term.
Our Ziwox A, mid-term Fundamental Score for USD is 1. and Fundamental Score for JPY is 1.

Market Overview & Performance

In the current trading session, "London", Market risk sentiment is Classic Risk-ON. The Australian dollar and New Zealand Dollar recorded the strongest performance, while the Gold and Yen are weakest so far.

Currencies performance vs US dollar "USD"
Gold "XAU", recorded a -0.43% decrease against us dollar.
Euro "EUR", performance has been 0.07% up so far
Pond "GBP", performance has been -0.22% down as of now
Australian dollar "AUD", has risen by 0.66%
New Zealand dollar "NZD", has risen by 0.25%
Japanese YEN "JPY", experienced -0.39% fall
Swiss franc "CHF", experienced 0.06% rise so far
Canadian dollar "CAD", has gained 0.09%
Market risk sentiment is ON, This means Investors embrace risk, driving demand for riskier assets and higher-yielding currencies while safe-haven assets weaken.

Market Sentiment and Positioning

USD COT (Commitments of Traders):

Institutions Net Position on >U.S. Dollar Index is -4282 included 16873 long, 21155 short and 1752 position changed from last week.
So they mainly have a bearish view on this asset and sold USD for lower prices in long-term.
Last week 1752 repositioning Indicates closed positions and short-term profit-taking.

JPY COT (Commitments of Traders):

Institutions Net Position on >Japanese Yen is 127338 included 170624 long, 43286 short and -4939 position changed from last week.
So they mainly have a bullish view on this asset and bought JPY for higher prices in long-term.
Last week -4939 repositioning Indicates closing positions, short-term profit-taking, or a general pessimism about prices.

Retail Traders:

Crowd traders or Retail traders are bullish on the USDJPY with 33% 67% ratio. 5173 long pos and 5791 short position.
We generally adopt a contrarian approach towards crowd sentiment and we give probability USDJPY prices may continue to rise.

Technical Levels and Support/Resistance

The USDJPY pair is approaching a critical technical support level near 144.288.
Technical trend is BUY, If the pair continues to weaken, this support could become a good area to enter a long positions.
On the upside, there is key resistance near 147.097. Technically, A break above this resistance could signal a shift in momentum, but need to get a confirmation in this area due to the reversal or correction potential.