- At the start of this important week's trading, the Japanese yen rose to around 153 yen against the US dollar, after rising more than 2% last week.
- This is amid growing speculation that the Bank of Japan will raise interest rates at its next meeting to control inflation and defend its currency.
- Financial markets are betting that the central bank will raise interest rates by 10 basis points to 0.1% this week, and it is widely expected to outline its plans for tightening monetary policy.
According to Forex trading, the Japanese yen has been rising since mid-July, due to suspected interference by Japanese authorities. This move has boosted the forced unwinding of short-term deals, as well as safe haven buying after global stocks were sold. Moreover, expectations that the US Federal Reserve will start cutting interest rates soon weighed on the dollar, while other major currencies were lifted.
According to forex market trading, the Japanese Yen has been rising since mid-July due to suspected intervention by Japanese authorities. This move has reinforced the forced unwinding of short-term positions, as well as safe-haven buying after the global stock market sell-off. Additionally, expectations that the US Federal Reserve will soon begin cutting interest rates have weighed on the dollar while boosting other major currencies.
Japanese stocks tracked gains on Wall Street on Friday as the latest U.S. inflation figures bolstered bets that the Federal Reserve will start cutting U.S. interest rates in September. Meanwhile, investors remained cautious ahead of the Bank of Japan's policy meeting this week that could see a potential rate hike. Markets are betting that the BOJ will raise rates by 10 basis points to 0.1% and is widely expected to announce plans to scale back bond purchases.
Technology stocks led gains with Disco Corp (3.2%), Tokyo Electron (3.7%) and SoftBank Group Corp (2.3%). Other index heavyweights also rose, including Mitsubishi Heavy Industries (3.4%), Toyota Motor (2%) and Shin-Etsu Chemical (8.6%).
Overall, investors began this interesting week desperately searching for answers to questions about the immediate path of global monetary policy after mixed signals from major economies turned markets upside down. Major central banks are set to meet in Tokyo and Washington on Wednesday and in London on Thursday, with traders struggling to decide whether the Bank of Japan will raise interest rates and then when and by how much the Federal Reserve and the Bank of England will cut them. At stake are recent gains in the yen and the pound, as well as falling short-term US Treasury yields. Many markets ended last week looking nervous due to the uncertain outlook for policy and economic growth.
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USD/JPY Technical Analysis and Expectations Today
The USD/JPY price performance is still bearish and may disappear if the Japanese central bank does not deliver what the markets aspire to in terms of raising Japanese interest rates and if the US jobs numbers come out stronger than expected and the US central bank's tone remains hawkish. If that happens, we do not rule out a return to the psychological resistance area of 160.00 again. If the opposite happens, breaking the support level of 15.00 will be an easy target for the bears.
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