FX.co ★ UFCworriers | USD/JPY

USD/JPY trades flat near 160.00 as risks of a Japanese intervention curtail gains despite an upbeat USD. USD/JPY is up 0.91% so far this week and is still poised to record a third consecutive week of gains amid rising chances of more Federal Reserve (Fed) rate hikes, which keeps the positive US-Japan yield differential in favor of USD. "The government will continue to do its utmost to ensure that there is an orderly foreign exchange market," Japanese PM Sanae Takaichi said on Friday. "It is our continued policy to maintain close communication with the financial authorities of the United States of America." Commerzbank analysts believe that expected interest rate hikes from the Bank of Japan will do little to boost the currency in the short term. "Whereas we also expect the BoJ to undertake another two rate increases in December this year and early next year, this is no longer favorable to the JPY. It merely indicates the convergence between the central banks, which will have little effect on the currency," Commerzbank analysts stated. With these in mind, Commerzbank notes that "we see little potential for the JPY in the coming period," mentioning that "in recent days, the JPY has even weakened moderately due to rising expectations of the Fed and is currently trading just under USD-JPY 160." "By the mid-year next year, we expect a slight appreciation towards 155," they added. The USD/JPY currency pair recovered substantially from its recent September lows at 152.89 and then formed a tight consolidation pattern. The fresh up move pushes the pair above the consolidation pattern and the 100-day and 200-day SMAs at 158.97 and 158.74, respectively. First, attention will be paid to the horizontal resistance level at 160.00, which lies just above the market and serves as nearby resistance, with RSI strengthening around 64 and a positive MACD signal pointing to bullish dynamics that do not contradict the constructive price setup. For upside targets, a sustained breakout above the first resistance at 160.00 would open the way to the next resistance levels at 161.00 and 162.00, where previously encountered supply should appear. On the downside, initial demand will appear near the current area, backed by the 100-day and 200-day SMAs at 158.97 and 158.74, respectively, with further demand near the 50-day SMA at 157.44 and horizontal support at 156.00.