USD/JPY Absorbs Yen Selling, Sets Stage for Reversal
The USD/JPY pair has absorbed massive yen selling and is currently holding above key support levels. This resilience in the face of significant selling pressure suggests that a shift in momentum may be on the table.
The recent bout of yen selling was driven by the persistent interest rate differential between the U.S. and Japan. The U.S. Federal Reserve maintains a higher benchmark rate compared to the Bank of Japan's ultra-loose monetary policy, making the dollar more attractive for yield-seeking investors.
The daily chart for USD/JPY shows that after a sharp upward spike, the pair has formed a series of higher lows, indicating buying interest is emerging at lower levels. A sustained break above the immediate resistance level could confirm the reversal setup and open the door for a test of recent highs.