Japan's economic recovery supports the yen, and the dollar-yen exchange rate faces a test
2025-07-01 22:09:17
On Tuesday (July 1), the USD/JPY exchange rate continued its downward trend and fell below the 143 mark, the lowest level in nearly half a month. In terms of news, the dollar was under pressure mainly due to the Fed's dovish stance and the pressure of US fiscal uncertainty, while the yen was boosted by safe-haven buying supported by fundamentals.
The weakness of the US dollar has become the main theme of the current foreign exchange market. As the momentum of US economic growth slows down and market expectations for a rate cut in September continue to rise, traders' risk appetite for the US dollar has clearly weakened. At the same time, the US's negotiations on Japan's further opening of its agricultural and automobile markets have reached a deadlock, escalating tensions in bilateral relations.
Despite this, signs of rebalancing in Japan's economy are emerging, with the confidence index of large manufacturers rising to 13, exceeding market expectations, reflecting a modest improvement in business confidence. Bank of Japan officials continued to use a cautious tone, emphasizing that they would not raise interest rates hastily before inflation targets were met, which kept market expectations for the yen policy stable.
From the daily chart, the exchange rate is currently between the middle and lower bands of the Bollinger Bands, and is testing the key support band area. The lower band of the Bollinger Bands is located at 142.710, and the intraday low is close to this position. Analysts believe that 141.500 is the core support level. If it effectively falls below this level in the future, it may open up a new round of downward space.
In terms of MACD indicators, the fast and slow lines have formed a dead cross structure, and the MACD histogram shows an enlarged downward trend, indicating that the short-term momentum is gradually increasing. The RSI index is currently around 42.2, which has not yet entered the oversold zone, but is close to the critical point of a technical reversal.
The analysis shows that the upper resistance of the price is concentrated at 145.000, which is also the overlapping area of multiple high points in the previous period, and constitutes an important pressure zone in the short term. If the price cannot stand firm at this level, the trend will still be bearish.
The current market sentiment is clearly cautious. Against the backdrop of a weak dollar, some traders have turned to the yen for risk hedging. Despite the escalation of the US-Japan trade dispute, the market has not sold off the yen significantly, reflecting traders' recognition of the stability of the yen policy and its safe-haven properties.
At the same time, the ADP and non-farm payroll reports to be released in the United States will become the biggest source of uncertainty this week. The market tends to reduce positions before the data is released, increasing the wait-and-see atmosphere, and the overall short-term sentiment is weak.
From the perspective of technical structure in the short term, the exchange rate is currently running to the key support area. Analysts believe that if 141.50 is not effectively broken, a technical rebound may occur in the short term.
Long-term Outlook From a long-term perspective, the medium-term trend of USD/JPY still depends on the change in the US-Japan interest rate differential. Analysts believe that if domestic inflation in Japan continues to rise moderately and the policy stance tends to normalize, a structural turning point may be formed. If the Fed turns to a rate cut rhythm in the second half of the year, the exchange rate will face structural downside risks in the medium and long term.
The weakness of the US dollar has become the main theme of the current foreign exchange market. As the momentum of US economic growth slows down and market expectations for a rate cut in September continue to rise, traders' risk appetite for the US dollar has clearly weakened. At the same time, the US's negotiations on Japan's further opening of its agricultural and automobile markets have reached a deadlock, escalating tensions in bilateral relations.
Despite this, signs of rebalancing in Japan's economy are emerging, with the confidence index of large manufacturers rising to 13, exceeding market expectations, reflecting a modest improvement in business confidence. Bank of Japan officials continued to use a cautious tone, emphasizing that they would not raise interest rates hastily before inflation targets were met, which kept market expectations for the yen policy stable.
Technical aspects:
From the daily chart, the exchange rate is currently between the middle and lower bands of the Bollinger Bands, and is testing the key support band area. The lower band of the Bollinger Bands is located at 142.710, and the intraday low is close to this position. Analysts believe that 141.500 is the core support level. If it effectively falls below this level in the future, it may open up a new round of downward space.
In terms of MACD indicators, the fast and slow lines have formed a dead cross structure, and the MACD histogram shows an enlarged downward trend, indicating that the short-term momentum is gradually increasing. The RSI index is currently around 42.2, which has not yet entered the oversold zone, but is close to the critical point of a technical reversal.
The analysis shows that the upper resistance of the price is concentrated at 145.000, which is also the overlapping area of multiple high points in the previous period, and constitutes an important pressure zone in the short term. If the price cannot stand firm at this level, the trend will still be bearish.
Market sentiment observation
The current market sentiment is clearly cautious. Against the backdrop of a weak dollar, some traders have turned to the yen for risk hedging. Despite the escalation of the US-Japan trade dispute, the market has not sold off the yen significantly, reflecting traders' recognition of the stability of the yen policy and its safe-haven properties.
At the same time, the ADP and non-farm payroll reports to be released in the United States will become the biggest source of uncertainty this week. The market tends to reduce positions before the data is released, increasing the wait-and-see atmosphere, and the overall short-term sentiment is weak.
Outlook
From the perspective of technical structure in the short term, the exchange rate is currently running to the key support area. Analysts believe that if 141.50 is not effectively broken, a technical rebound may occur in the short term.
Long-term Outlook From a long-term perspective, the medium-term trend of USD/JPY still depends on the change in the US-Japan interest rate differential. Analysts believe that if domestic inflation in Japan continues to rise moderately and the policy stance tends to normalize, a structural turning point may be formed. If the Fed turns to a rate cut rhythm in the second half of the year, the exchange rate will face structural downside risks in the medium and long term.
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