Analysing the Volatility Spike on the USD/JPY ChartAnalysing the Volatility Spike on the USD/JPY Chart
The USD/JPY chart offers plenty of noteworthy insights for analysis:
→ A one-month low was recorded today (marked by the arrow);
→ This was followed by a sharp upward reversal, with a series of large bullish candlesticks forming on the intraday chart.
Why Is USD/JPY Moving Sharply Today?
The primary driver appears to be recent statements from Bank of Japan Governor Kazuo Ueda.
According to Trading Economics, this morning Ueda:
→ warned of rising core inflation risks linked to increasing food prices;
→ indicated that the Bank of Japan is prepared to adjust its monetary policy in order to achieve a stable inflation target.
Latest data show that Japan’s core inflation unexpectedly rose to 3.5% — the highest level in two years — reinforcing the case for further rate hikes. However, what's particularly striking is that despite Ueda’s hawkish tone, the yen is weakening.
Technical Analysis of the USD/JPY Chart
Yen fluctuations formed a downward trajectory (marked in orange) in the second half of May, partly driven by US dollar weakness. Following a period of relative calm, the market has shifted into high gear — the ATR indicator is climbing sharply from multi-month lows, breaking through resistance at the 143.0 level.
This aggressive price action on the USD/JPY chart today suggests we may be witnessing an attempted bullish breakout from the channel. In light of this, it is possible that the surge in volatility reflects a fundamental shift in market sentiment — one that could potentially lead to the development of an upward trend.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
