The Japanese Yen is losing ground against the US Dollar amid uncertainties over the Bank of Japan’s rate-hike plans. Despite recent intervention warnings and a risk-off mood, the JPY continues to struggle. The recent rally in the USD has pushed the USD/JPY pair to a nearly three-month high, further exacerbating the decline of the JPY.
The Federal Reserve’s expected slower rate cuts have fueled an upswing in US Treasury bond yields, supporting the ongoing USD rally. This trend indicates a potential further depreciation in the JPY in the near term. Traders are cautious about placing aggressive bets on the USD/JPY pair and are waiting for clues from Tokyo consumer inflation data to gauge the BoJ’s rate-hike plans.
The Japanese Yen has touched its weakest level against the US Dollar in almost three months due to doubts surrounding the Bank of Japan’s rate-hike plans. Verbal interventions by Japanese authorities have failed to stop the slide, and the prospects of slower rate cuts by the Federal Reserve have led to a selloff in the bond market, pushing the USD to its highest level in early August.
Markets are also closely monitoring the US Presidential election and speculations about inflation-generating tariffs. The ongoing conflict in the Middle East has tempered investors’ appetite for risky assets, with diplomatic efforts failing to bring an end to the year-long conflict. Traders are now awaiting the release of US Existing Home Sales data for market direction.
From a technical perspective, the USD/JPY pair could pause near the 152.00 mark, with the potential for further bullish momentum. However, caution is advised as the RSI approaches overbought territory. Any corrective slide is likely to find support near the 151.20-151.15 region, with further declines presenting buying opportunities near the 150.60 area.
The Bank of Japan’s ultra-loose monetary policy aims to stimulate the economy and fuel inflation through Quantitative and Qualitative Easing (QQE). The bank has made strategic shifts in its policy, including introducing negative interest rates and directly controlling the yield of 10-year government bonds. The policy has led to a depreciation of the Yen against other currencies, with a reversal of the trend expected in 2024.
Overall, uncertainties surrounding the Bank of Japan’s rate-hike plans and global economic dynamics continue to weigh on the Japanese Yen. The ongoing rally in the US Dollar and geopolitical tensions are contributing to the JPY’s decline. Traders are closely monitoring key data releases and central bank speeches for further insights into the future direction of the USD/JPY pair.
