Under the influence of uncertainty and risk appetite sentiment from the Bank of Japan, the Japanese yen strengthened at the beginning of the new week, causing the USD/JPY to fall below 154.00 points. The nomination of US Treasury Secretary Scott Bessant triggered a sharp drop in the yield of US treasury bond bonds. This in turn has prompted traders to reduce their long positions after the US dollar recently rose to a two-year high, and has pushed some funds into the lower yielding Japanese yen.

Forex analyst Haresh Menghani said that the uncertainty brought by the Bank of Japan's interest rate hike plan, as well as the current prevailing risk appetite environment, may limit any meaningful rise in the yen. In addition, it is expected that the policy of President elect Trump of the United States may rekindle inflation and limit the expectation of the Federal Reserve to slowly cut interest rates, which may help the yield of treasury bond bonds. Conversely, this will benefit the long position of the US dollar and provide support for the US dollar against the Japanese yen.

Menghani pointed out that from a technical perspective, the US dollar has fallen below the 21 day moving average against the Japanese yen, seemingly laying the foundation for further decline. In other words, any further decline may find some support near the 153.30-153.25 region. The next digit is 153.00. If the US dollar/Japanese yen continues to fall below this level, it will be seen as a new trigger point for bearish traders, paving the way for further decline. Subsequently, the exchange rate may accelerate its decline towards the next important support level of 152.50, ultimately falling towards the 200 day moving average (currently at 151.96).

On the other hand, the integer 154.00 seems to constitute the current immediate resistance level. Some subsequent purchases will help USD/JPY recover from the psychological level of 155.00 and further climb to the resistance zone of 155.40-155.50. If strong momentum can be maintained above the latter, it is expected to break through the 156.00 level and further challenge the multi month high of 156.75 reached on November 15th.

USD/JPY daily chart