JPY - Risk aversion limits yen's losses

Financial markets in Britain, Japan, Hong Kong and mainland China were closed on Monday, and trading volumes were much lower. The latest U.S. services sector report reinforced expectations that the Federal Reserve will slowly cut interest rates amid signs of firming inflation. The Institute for Supply Management (ISM)'s non-manufacturing Purchasing Managers' Index (PMI) released on Monday rose to 51.6 last month from 50.8 in March; economists expected the services PMI to fall to 50.2. Prices paid for services inputs jumped to 65.1, the highest since January 2023, from 60.9 in March, the survey showed. The Federal Reserve is expected to keep interest rates stable in the range of 4.25%-4.50% on Wednesday; the solid performance of the U.S. non-farm payrolls report for April released last Friday also provided some breathing room for the Federal Reserve to remain patient on the issue of interest rates. The benchmark fed funds futures market has priced in more than a 70% chance that the Fed will resume cutting rates at its July policy meeting; overall, markets are pricing in about 77 basis points of rate cuts this year, calculations by the London Stock Exchange Group (LSEG) show.

As can be seen from the technical chart, the RSI and stochastic index rebounded from the oversold area, and the MACD indicator broke through the signal line. It is expected that the U.S. dollar against the yen is about to reverse the downward trend since the end of last month. The nearest resistance is at 146 and the 50-day moving average of 146.70. Based on the cumulative decline from the high of 151.21 on March 28, the 61.8% rebound is 146.85. The next key references are 148 and 149.40. The supporting level will look at 143.40 and 142, and the next level is expected to be 140.40 to 139.80.

Forecast range:
Resistance 146.00– 146.90 – 148.00 – 149.40
Support 143.40 – 142.00 – 140.40 – 139.80

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