The Japanese Yen (JPY) struggled to maintain its strength against the US Dollar amid uncertainties surrounding a possible rate hike by the Bank of Japan (BoJ). Japanese Prime Minister Shigeru Ishiba’s comments on monetary policy, along with economic indicators such as a decline in real wages and household spending, raised doubts about the BoJ’s plans, leading to a dip in the JPY. This allowed the USD/JPY pair to gain some positive traction, supported by a modest uptick in the US Dollar.
While the market expects the Federal Reserve (Fed) to continue cutting interest rates, the possibility of a more aggressive policy easing has been ruled out. This has helped limit the USD corrective pullback and provided some support to the USD/JPY pair. However, a softer risk tone in the market has prevented significant losses for the JPY, potentially capping the currency pair’s movements ahead of the US Producer Price Index (PPI) report scheduled for later on Friday.
Political uncertainties in Japan, coupled with a generally positive risk sentiment, could further undermine demand for the JPY and support the USD/JPY pair. The US Dollar reached its highest level since mid-August following positive CPI data, indicating a rise in inflation. Despite this, signs of weakness in the US labor market are emerging, with a notable increase in Americans seeking unemployment benefits. With expectations for continued interest rate cuts by the Fed, the USD bulls remain cautious ahead of the upcoming PPI release.
From a technical standpoint, the USD/JPY pair’s bullish potential remains intact as long as it stays above the key support level of 148.00. Any dip in price is likely to attract new buyers and keep losses limited near this level. On the upside, the currency pair faces immediate resistance at the 149.00 round figure, with a potential to aim for higher levels around the 149.55-149.60 region. Further bullish momentum could push prices towards the 150.00 psychological mark and beyond.
In terms of currency movements, the US Dollar was strongest against the Canadian Dollar based on the percentage changes displayed in the table. The heat map provides a visual representation of how major currencies fared against each other, with the USD showing slight declines against the Euro, Pound, and Yen, among others. These fluctuations in currency values reflect the ongoing market dynamics and volatility influenced by economic data releases and geopolitical developments.
