Japanese Yen: Bullish momentum extends against US Dollar – Societe Generale

Societe Generale’s Kenneth Broux highlights a sharp USD/JPY pullback, with the pair breaking key graphical support at 155 and trading below its 200-day moving average. The bank flags resistance near 156.25 and downside objectives at 152.00/151.60 and 149.50. They stress that positioning, momentum and technicals, rather than a repeat of 2024’s volatility episode, are currently driving the Japanese Yen’s revival.

Yen rebound driven by momentum and flows

"USD/JPY has experienced a sharp pullback after dipping below its 200-DMA (158.40) recently."

"The pair has breached the graphical support (155) formed by the May and August lows, highlighting the persistence of steady downward momentum."

"If a brief recovery develops, the peak achieved earlier this week at 156.25 may act as a resistance."

"The next potential objectives could be located at the January lows of 152.00/151.60 and projections of 149.50."

"A correction of almost 7% in USD/JPY since the start of August is roughly half only of the collapse in the summer of 2024 when unilateral intervention and the unwinding of leveraged carry trades in equity and currency markets flushed out Yen shorts, caused a spike in volatility incl the VIX and reinforced the appeal of Gold as diversification asset."