USD/JPY Soars as Yen Weakens on BoJ Policy Concerns

The USD/JPY pair climbed to 148.31 on Monday, extending its gains from the previous week as the US dollar strengthened across the board. The yen faced additional pressure from heightened anticipation around upcoming comments from Federal Reserve officials and the release of critical US inflation data.
RoboForex | 353 days ago

Last week, the Federal Reserve delivered a widely expected 25-basis-point cut – its first since December. The central bank's projections indicated two further reductions before the end of the year.

This contrasts sharply with the Bank of Japan's (BoJ) stance. Last Friday, the BoJ held its key rate at 0.5% per annum for a fifth consecutive meeting, a decision that was squarely in line with market forecasts. In its accompanying statement, the central bank described a moderate economic recovery but pointed to persistent weak spots and warned of risks stemming from global trade policy.

In a more significant step, the regulator unanimously approved plans to begin selling ETFs and J-REITs from its vast portfolio. This detail is particularly noteworthy and can be interpreted as a cautious signal that the bank is preparing to wind down its long-standing asset purchase program.

This week, investor focus will shift to the latest PMI data and inflation figures for Tokyo, alongside the release of the minutes from the BoJ's July meeting. These documents may provide crucial insights into the timing and nature of the regulator's next policy steps.

Technical Analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY found solid support at the 147.20 level and is now developing a fresh upward move targeting 148.88. We expect this target to be tested today. Following this, a corrective pullback towards 147.20 is likely. Following this correction, we anticipate another upward move aiming for the 150.00 psychological level. This outlook is technically confirmed by the MACD indicator, whose signal line is positioned above zero and pointing sharply upwards.

H1 Chart:

The H1 chart shows the pair completed an upward move to 148.23, followed by a correction to 147.20. The current momentum is building for a further advance towards 148.88. Upon reaching this level, a corrective pullback towards 147.20 is possible. The broader upward trajectory is then expected to resume, with a minimum target of 150.00. This scenario is supported by the Stochastic oscillator, with its signal line currently above 50 and rising firmly towards the 80 level.

Conclusion

The yen remains under significant pressure, caught between a resilient US dollar and the Bank of Japan's cautious, gradual approach to policy normalisation. The path of least resistance for USD/JPY remains higher, contingent on this week's key data releases reinforcing the current fundamental and technical picture.

Disclaimer: Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

 

RoboForex
Type: STP, ECN, Market Maker
Regulation: FSC (Belize)
read more
US Yields Rise Despite Buybacks; Eyes on ECB Hike

US Yields Rise Despite Buybacks; Eyes on ECB Hike

Tensions escalated as the U.S. and Iran engaged in the largest maritime exchange in six months near the Strait of Hormuz, pushing Brent crude above $100/bbl. U.S. equities remained under pressure, Treasury yields rose even after the Treasury tripled long‑term bond buybacks, and a softer dollar supported gold.
ATFX | 14h 15min ago
Yen Hits 6-Month High, Volatility Returns After North American Holiday.

Yen Hits 6-Month High, Volatility Returns After North American Holiday.

US markets were closed yesterday for a bank holiday, limiting overall market activity. The US dollar weakened as the Japanese yen surged, while crude oil extended gains amid escalating tensions in the Middle East. Iran warned it could target energy infrastructure across the region if the US launches further attacks on Iranian assets.
ATFX | 2 days ago
US Payrolls Hit 5-Month High as Markets Await CPI This Week.

US Payrolls Hit 5-Month High as Markets Await CPI This Week.

U.S. and Canadian markets are closed for the holidays. With investors digesting nonfarm data and Middle East tensions high, traders should watch for unusual price swings amid low liquidity. Eurozone Q2 GDP is expected to be 0.4%, which could affect Thursday’s ECB meeting.
ATFX | 3 days ago