Sentiment is sluggish, and the dollar is under pressure against the yen bulls

On Monday (August 25), the dollar stabilized against the yen and rallied slightly, and the European session remained volatile around 147.30. The market reaction was limited by the dovish remarks of Federal Reserve Chairperson Powell, which caused the dollar to fail to rebound effectively. In his speech at the Jackson Hole Economic Seminar, Powell made it clear that the Federal Reserve will likely adjust monetary policy to address downside risks to the US economy, especially against the backdrop of weak labor market.

Meanwhile, Kazuo Ueda, governor of the Bank of Japan, made more hawkish remarks on the same occasion, pointing out that Japan's tight labor market and rising wages will prompt the Bank of Japan to continue to implement monetary tightening policies. As a result, the yen gained some support, limiting the recovery of the dollar against the yen.

Fundamentals

Mr. Powell's comments created uncertainty about the outlook for the dollar, especially given slowing growth and inflation risks. Concerns about the US economy intensified, especially as manufacturing and the jobs market underperformed. Instead, hawkish comments from the Bank of Japan supported the yen, strengthening it and dampening the dollar's gains.

This week, traders will focus on U.S. economic data, including the Chicago Federal Reserve's index of national activity and new home sales, which could further influence market expectations for Federal Reserve policy and thus the dollar's move against the yen.

Technical aspects:

The recent trend of the US dollar against the Japanese yen remains at around 147.00. Bollinger bands show that the price is currently fluctuating between the middle and lower Bollinger tracks, and the price has not broken through the upper track of 149.50, nor has it fallen below the lower track of 145.90, indicating that the market is currently in the consolidation stage and lacks a clear trend direction.

Support and resistance levels:

Support: The current support around 147.00 is important. If the price breaks through this support downwards, it may further test the strong support around 145.90.

Resistance level: The 149.50 line remains an important resistance level in the near future. If it breaks through this level, the dollar may usher in a larger rebound against the yen.

The MACD indicator shows that the current DIFF line remains in the positive area, but is close to the 0 axis, indicating that the buyer's momentum is gradually weakening. The MACD bar chart gradually narrows, indicating that the market momentum is shrinking, and the market may enter a range.

The RSI index is currently at 49.01, indicating that the market has not entered the overbought or oversold zone, indicating that the market sentiment is relatively neutral. This level may suggest that prices will continue to oscillate within the existing range pending further direction confirmation.

Market sentiment observation:

The dovish stance of the Federal Reserve has left market sentiment conservative and the dollar's rally unsustainable. At the same time, hawkish remarks from the Bank of Japan have also led to a more positive view of the yen. As a result, market sentiment is currently more cautious, with traders still waiting for more economic data and further guidance on central bank policy.

Outlook for the future market:

Bulls Outlook: If the dollar breaks through 148 against the yen, especially the resistance level of 149.50 on the upside, it may reignite the bulls' momentum and usher in a stronger rally. At this time, you can pay attention to further guidance from the Federal Reserve and changes in global economic data.

Bearish outlook: If the support level of 147.00 is broken, the pair may test the key support around 145.90, and further downside may lead to the intensification of bears, forming a large downside space. At this time, traders are concerned about the policy moves of the Bank of Japan and the weakness signals of the US economy.