The Yen Is Set to Become Weaker
USDJPY experienced a significant decline of 5.5% in August, dropping to 141.67, the lowest level since January 3. The pair then rebounded by 4.3% to 147.89, reflecting substantial volatility for a major reserve currency. In comparison, no other reserve currency has shown such extreme movement; for instance, the Mexican peso, which is not a reserve currency, dropped by 14.8%.
This sharp decline left USDJPY rapidly oversold, with the price falling below the uptrend support established since January 16, 2023. Such an oversold condition suggests a strong potential for recovery. Even if the pair experiences further minor declines, there is limited room for additional downside. The oversold tension makes a recovery likely, making it reasonable to consider buying in the 144.00-146.00 range. The targets for this potential rebound are set at 150.0-152.00, with a stop-loss recommended at 140.00.
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