- The USD/JPY pair extends the overnight turnaround from over a one-week low.
- Fading safe-haven demand, along with the BoJ uncertainty, undermines the JPY.
- Bets for a less aggressive Fed easing lend support to the USD and boost the pair.
The Japanese Yen (JPY) extends its steady intraday descent against its American counterpart, pushing the USD/JPY pair to a fresh weekly top, closer to mid-155.00s heading into the European session on Wednesday. This comes on the back of the previous day’s turnaround and supports prospects for a further JPY depreciation on the back of the uncertainty over the timing of another interest rate hike by the Bank of Japan (BoJ).
Meanwhile, rebounding US Treasury bond yields revive the US Dollar (USD) and further contribute to driving flows away from the lower-yielding JPY. Apart from this, a generally positive risk tone seems to undermine the safe-haven JPY and suggests that the path of least resistance for the USD/JPY pair is to the upside. That said, intervention fears could limit JPY losses ahead of speeches from influential FOCM members.
Japanese Yen bears regain control amid BoJ uncertainty, rebounding US bond yields and receding safe-haven demand
- Russian President Vladimir Putin approved the change to the country’s nuclear doctrine on Tuesday, days after US President Joe Biden authorized Ukraine to use long-range American missiles against military targets inside Russia.
- Russian Foreign Minister Sergei Lavrov said the country would do everything possible to avoid the onset of a nuclear war and called Germany’s decision on Monday not to provide long-range missiles to Ukraine a responsible position.
- Meanwhile, the White House said that the United States (US) does not plan to adjust its own nuclear posture in response to Russia’s move, which, in turn, tempered safe-haven demand and weighed on the Japanese Yen.
- Bank of Japan Governor Kazuo Ueda earlier this week warned against keeping borrowing costs too low and signaled another interest rate increase, was vague on the timing and offered no hints about a hike in December.
- A report published by the Ministry of Finance earlier this Wednesday showed that Japan’s total exports increased by 3.1% and imports grew by 0.4% from a year earlier in October, resulting in a trade deficit of ¥461.2 billion.
- Market participants have been anticipating slightly higher inflation after former President Donald Trump’s election victory, which was seen as a key trigger behind the recent sharp move up in the US Treasury bond yields.
- Federal Reserve Bank of Kansas President Jeffrey Schmid noted on Tuesday that large fiscal deficits will not cause inflationary pressures because the central bank will prevent it, though that could mean higher interest rates.
- The US Dollar consolidates its recent pullback from the year-to-date high and languishes near the weekly low, albeit, the downside remains cushioned in the wake of expectations of a less aggressive easing by the Fed.
- Scheduled speeches by a slew of influential FOMC members later this Wednesday will influence the USD price dynamics and provide some impetus to the USD/JPY pair in the absence of any relevant US macro data.
USD/JPY technical setup supports prospects for further appreciating move towards reclaiming the 156.00 mark
From a technical perspective, the USD/JPY pair’s overnight strong rebound suggests that the recent corrective slide from a multi-month high has run its course. The subsequent move up, along with the positive oscillators on the daily chart, supports prospects for a further appreciating move for spot prices. Furthermore, sustained strength and acceptance above the 155.00 mark validates the positive outlook for the currency pair.
Some follow-through buying beyond the weekly top, around the 155.35 area, reaffirms the positive outlook and should now lift the USD/JPY pair to the 155.70 intermediate hurdle en route to the 156.00 round-figure mark. The momentum could extend further towards retesting the multi-month top, around the 156.75 region touched last Friday.
On the flip side, any meaningful corrective slide below the 155.00 mark now seems to find decent support near the 154.40-154.35 area ahead of the 154.00 mark. This is followed by the 153.30-153.25 region, or the overnight swing low, the 153.00 round figure and the next relevant support near the 152.70-152.65 area. Failure to defend the said support levels could drag the USD/JPY pair to the very important 200-day Simple Moving Average (SMA), around the 151.90-151.85 region.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | -0.24% | 0.42% | -0.07% | 0.04% | 0.13% | 0.16% | |
| EUR | -0.02% | -0.27% | 0.41% | -0.09% | 0.02% | 0.11% | 0.13% | |
| GBP | 0.24% | 0.27% | 0.65% | 0.17% | 0.28% | 0.37% | 0.40% | |
| JPY | -0.42% | -0.41% | -0.65% | -0.48% | -0.37% | -0.29% | -0.26% | |
| CAD | 0.07% | 0.09% | -0.17% | 0.48% | 0.11% | 0.20% | 0.23% | |
| AUD | -0.04% | -0.02% | -0.28% | 0.37% | -0.11% | 0.09% | 0.12% | |
| NZD | -0.13% | -0.11% | -0.37% | 0.29% | -0.20% | -0.09% | 0.03% | |
| CHF | -0.16% | -0.13% | -0.40% | 0.26% | -0.23% | -0.12% | -0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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