Analyzing the trend of USD/JPY from a technical perspective
2024-12-03
■ USD/JPY rose to around 162 in 2024, a 38-year high
■ According to the "Volatility Observation Theory (N Calculation Value)," the upward trend may be maintained before July 2025
2024 is coming to an end. Looking back on this year, USD/JPY opened at a high range of 140 yen. Under the influence of the widening interest rate gap between Europe, the United States, and Japan rose to around 162 in July, a 38-year high. However, the Japanese government conducted foreign exchange interventions totaling 9.7 trillion yen in April and May, respectively, and added 5.5 trillion yen in July. At the same time, the Bank of Japan ended its negative interest rate policy in March and raised its benchmark interest rate to 0.25% in July. At this time, expectations of a rate cut by the Federal Reserve (FRB) increased, and market expectations for further rate hikes by the Bank of Japan also gradually increased. Affected by this, USD/JPY plummeted to a high range of 139 yen in September, almost wiping out the gains since the beginning of the year.
In the November US presidential election, the Republican Party won the presidency and control of both the Senate and the House of Representatives, triggering market concerns about the resurgence of inflation and the expansion of fiscal deficits. US Treasury yields rose. As a result, the USD/JPY rebounded to the high range of 156 but fell back to the mid-149 yen due to rising geopolitical risks in the Middle East and Europe.
From the monthly line, the amplitude from June to November this year is similar to the six-month amplitude from October 2022 to March 2023. In October 2022, the Japanese government implemented a foreign exchange intervention of about 5.4 trillion yen to promote the appreciation of the yen. At that time, the USD/JPY hit a 32-year high of 151.94 but then closed negative for three consecutive months since November 2022. It fell to a low of 127.21 in January 2023 and stabilized.
What will the future trend be? The "volatility observation theory (N calculation value)" can be used to predict future volatility from historical volatility. If September 2024 139.56 is the bottom, USDJPY may rise until July 2025, as it did after January 2023. In this case, the increase of 24.71 yen from the January 2023 low of 127.21 to the November 2023 high of 151.92 can be added to the September 2024 low of 139.56, and the potential upside target is calculated to be 164.27. However, this is only a hypothesis, and we need to see whether USDJPY can reach the July 2024 high of 161.99 again. The economic policies of the new Trump administration and the direction of Japanese and US monetary policies will be the crucial test.
■ According to the "Volatility Observation Theory (N Calculation Value)," the upward trend may be maintained before July 2025
2024 is coming to an end. Looking back on this year, USD/JPY opened at a high range of 140 yen. Under the influence of the widening interest rate gap between Europe, the United States, and Japan rose to around 162 in July, a 38-year high. However, the Japanese government conducted foreign exchange interventions totaling 9.7 trillion yen in April and May, respectively, and added 5.5 trillion yen in July. At the same time, the Bank of Japan ended its negative interest rate policy in March and raised its benchmark interest rate to 0.25% in July. At this time, expectations of a rate cut by the Federal Reserve (FRB) increased, and market expectations for further rate hikes by the Bank of Japan also gradually increased. Affected by this, USD/JPY plummeted to a high range of 139 yen in September, almost wiping out the gains since the beginning of the year.
In the November US presidential election, the Republican Party won the presidency and control of both the Senate and the House of Representatives, triggering market concerns about the resurgence of inflation and the expansion of fiscal deficits. US Treasury yields rose. As a result, the USD/JPY rebounded to the high range of 156 but fell back to the mid-149 yen due to rising geopolitical risks in the Middle East and Europe.
From the monthly line, the amplitude from June to November this year is similar to the six-month amplitude from October 2022 to March 2023. In October 2022, the Japanese government implemented a foreign exchange intervention of about 5.4 trillion yen to promote the appreciation of the yen. At that time, the USD/JPY hit a 32-year high of 151.94 but then closed negative for three consecutive months since November 2022. It fell to a low of 127.21 in January 2023 and stabilized.
What will the future trend be? The "volatility observation theory (N calculation value)" can be used to predict future volatility from historical volatility. If September 2024 139.56 is the bottom, USDJPY may rise until July 2025, as it did after January 2023. In this case, the increase of 24.71 yen from the January 2023 low of 127.21 to the November 2023 high of 151.92 can be added to the September 2024 low of 139.56, and the potential upside target is calculated to be 164.27. However, this is only a hypothesis, and we need to see whether USDJPY can reach the July 2024 high of 161.99 again. The economic policies of the new Trump administration and the direction of Japanese and US monetary policies will be the crucial test.