USDJPY forecast October 2022: Over a 32-Year High. Where’s the limit?

USDJPY has become one of the most exciting forex pairs to trade. On Thursday, the Japanese yen hit a historic 32-year low after releasing inflation data, which was even worse than in the US. Unlike the Fed, the Bank of Japan decided to keep the rates low. The forex market is targeting a strong dollar and a weak yen.

USDJPY Forecast October 2022: The Japanese government was forced to act

The problem with rate hikes by the BoJ is slow growth. Only in September, the Japanese government spent $20 billion to stimulate the struggling economy. Stagflation is a real threat.

Shunichi Suzuki, Japanese Minister of Finance, stated that the government would take action. Indeed, in less than an hour, USDJPY fell from 147.668 to 146.436. An intervention seemed obvious, but this didn’t help yen long term. On Friday, USDJPY set another record and hit 147.875.

USDJPY has gone up 3.25% since the last local low on October 5. One reason is the strengthening US dollar, but other major currencies outperform the weak yen.

Japanese Ministry of Finance seems helpless against international speculators, who feel the blood as JPY falls.

USDJPY forecast October 2022: The 1-hour chart shows that the upward trend accelerated yesterday after the release of inflation data (source: SimpleFX WebTrader)

USDJPY Forecast October 2022: Two different bullish scenarios

As for the technical analysis for USDJPY, the green bullish channel seems quite conservative today. The 1-hour chart shows that the upward trend accelerated yesterday after the release of inflation data. If this is one of the main reasons, we expect things to go as bad as the Yellow Channel, which would put the yen in a problematic position.

The next natural resistance for USDJPY is slightly above $148, somewhere between $148.16 and $148.34. Things around the $150 level should get interesting if it’s broken.us

The stochastic RSI is very high, suggesting that the USDJPY is overbought. Some long positions should be closed in the upcoming hours. However, this situation is new, and the Japanese currency may fall victim to speculation, especially with geopolitical tensions around the Pacific.

Keep a close eye on USDJPY today and in the upcoming week.