• Investors eagerly await the US nonfarm payrolls report.

• For the first time in over a month, the yen is gaining against the dollar.

• The yen has lost 12% of its value since the beginning of the year.

The USD/JPY price analysis leans south as the yen pulls away from its 38-year low, strengthening for the second session. On the other hand, the dollar was fragile as investors eagerly awaited the US nonfarm payrolls report.

For the first time in over a month, the yen is gaining against the dollar. However, the risk of intervention remains high. The currency has lost 12% of its value since the beginning of the year. Traders sold the yen and bought the dollar due to the wide gap in rates between the US and Japan.

Although the BoJ has started its rate-hiking cycle, the future remains bleak. Consumption in Japan remains weak, and a fragile economy complicates the outlook for a rate hike. Therefore, investors have continued selling the yen. This pushed the BoJ to intervene in the market twice. However, the impact was only temporary, as the decline later continued.

Japan’s Finance Minister repeated his usual warning on Friday, saying Japan will keep a close eye on financial markets.

Meanwhile, after a week of downbeat economic data, the dollar was bruised on Friday. The US economy is slowing down, and employment and business activity data confirmed this. Consequently, markets have raised the likelihood of a September Fed rate cut to 73%. However, this might change with the upcoming monthly employment figures. If the US adds fewer jobs than expected, rate cut expectations will rise. The reverse is also true.

USD/JPY key events today

• US average hourly earnings m/m
• US nonfarm payrolls
• US unemployment rate

USD/JPY technical price analysis: Bears take the lead after bearish RSI divergence

On the technical side, the USD/JPY price has broken below the 30-SMA for the time in many weeks. The break indicates a shift in sentiment from bullish to bearish. At the same time, the RSI has dipped into bearish territory below 50, suggesting strong downside momentum.

Bulls got exhausted as the price approached the 162.01 key level. Notably, the RSI made a bearish divergence, highlighting weaker bullish momentum. This allowed bears to take charge by pushing the price below the 30-SMA. The path is now clear for the price to revisit support levels like 160.00 and 158.00.

https://www.forexcrunch.com/blog/2024/07/05/usd-jpy-price-analysis-yen-rebounds-amid-intervention-fears/