USD/JPY Analysis: Calm Before the Storm?

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The USD/JPY chart today shows that the rate has stabilized at 152 yen per US dollar. But can we say that there is calm in the market?

Hardly.

First, it is important to note that in 2023 there was a sharp reversal of trend around the 152.00 level due to intervention by the Japanese authorities, which supported an excessively weak yen. Therefore, crossing this psychological threshold can serve as a trigger for a new intervention.

Secondly, Reuters writes about a growing volatility premium in the options market, which confirms the growing likelihood of a strong trend in the near future.

According to USD/JPY technical analysis:
→ ADX indicator is near its lows. When this situation was observed at the end of February, 2 sharp movements followed in March: a decline in USD/JPY to 146.6 and a subsequent recovery to 151.6.
→ the price of USD/JPY today is squeezed into a narrowing triangle between the level of 152.0 and the median line of the ascending channel. The price exiting the technical triangle may mean the beginning of a new trend.

Today, 2 important news are expected: after the publication of the ISM Services PMI index (at 17:00 GMT+3), a speech by the head of the Federal Reserve is expected (19:10 GMT+3). A piece of fundamental news could change the valuation of the US dollar and lead to a surge in volatility in the USD/JPY market – this should be given special attention, given the arguments presented.

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