USD/JPY Price Forecast: Dollar finds resistance at the 161.75 previous support
The US Dollar (USD) holds losses below 161.75 against the Japanese Yen (JPY) on Friday following a 100-pip reversal earlier on the day. Japanese Finance Minister Satsuki Katayama announced a plan to boost pension funds’ investment in domestic assets, which sent the Yen surging across the board during the Asian trading session.
Katayama said on Friday that the government wants the giant Japanese pension funds, which manage more than USD 1.8 trillion in assets, to redirect their investment into the domestic market. The market has seen this plan as more effective than interventions to support the Yen, and the immediate reaction was a strong JPY recovery.
The US Dollar, on the other hand, remains moderately soft, amid rumours that Qatar and Pakistan are working to bring US and Iran back to the negotiating table. Beyond that, the release of the minutes of June’s Federal Reserve (Fed) meeting, released on Wednesday, showed a split committee on interest rates, which cast doubt over the timing of the next hike, and added pressure on the USD.
Technical Analysis: Dollar bears are gaining momentum
USD/JPY trades at 161.70, with bulls capped below a previous support area at 161.75 so far. The loss of momentum is evident following Friday's reversal, with the four-hour Relative Strength Index (14) slipping toward the low-40s and the Moving Average Convergence Divergence (MACD) turning slightly negative.
Downside attempts, so far, have been contained near 161.30, which keeps the key 160.50 support area (July 2 low) out of sight for now. On the topside, bulls would need to breach the mentioned resistance area around 161.75 and Thursday's lows at 162.30 to look at the 40-year high, at 162.84, again.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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