- For the second consecutive week, bulls have controlled the direction of the US dollar against the Japanese yen (USD/JPY) with gains reaching the resistance level of 152.83 today, the pair's highest level in two weeks.
- The USD price is still stronger after the announcement of the US jobs numbers last week, followed by the announcement of the US inflation numbers this week.
- In contrast, the Japanese yen is affected by the recent announcements of the Bank of Japan.
Will the Bank of Japan Raise Interest Rates?
In this regard, officials at the Bank of Japan believe that waiting before raising interest rates may cost them little as they look forward to raising Japanese interest rates next week, depending on data and market developments. In general, even if the Bank of Japan decides to wait until January or longer, officials believe that this will not entail a huge cost as signs indicate that there is little risk that inflation may exceed the limit. At the same time, some officials do not oppose raising interest rates at this meeting if it is proposed.
In general, financial markets are trying to figure out when the Bank of Japan may raise interest rates again, as December and January meetings seem the most likely. In this regard, Bank of Japan Governor Kazuo Ueda stated in an interview with the Nikkei newspaper last month that increases are "approaching." A few days later, the Jiji Press reported concerns within the bank about raising interest rates too early.
US Interest Rate Cut Despite Inflation Figures
After the announcement of US inflation figures, which were in line with expectations, investors still expect the US Federal Reserve to cut US interest rates by a quarter of a percentage point in a few days, even after a new report showed an increase in US inflation. However, continued price pressures have also confirmed concerns that progress towards the US Federal Reserve's 2% target may falter. This could lead Fed officials to reduce the number of easing measures they expect in 2025 as they await further confirmation that US inflation is on track to reach their target. Overall, policymakers will issue new forecasts and US interest rate projections at the conclusion of their meeting on December 17-18.
The US Federal Reserve had started an easing cycle with an aggressive move by cutting half a point, driven by growing concerns that the slowing US labour market is approaching a dangerous tipping point. The next cut will be the third consecutive cut by the Federal Reserve and will reduce the federal funds rate to a range between 4.25% and 4.5%, which is a full percentage point below its level at the beginning of September.
Top Forex Brokers
Trading Tips:
We still recommend buying the dollar against the Japanese yen from every downward level, but without risk
USD/JPY Technical Analysis and Expectations Today:
As we previously expected, the bulls' control over the direction of the US dollar against the Japanese yen (USD/JPY) will increase in strength with the breaking of the 150.00 resistance, which has already happened. According to the performance on the daily chart above, the USD/JPY price is in an upward channel, as a result of which the direction of the Relative Strength Index (RSI) has turned upward, but the MACD is still waiting for more gains to confirm its upward shift. Currently, the closest resistance levels suitable for the current upward trend are 153.60 and 156.00.
Conversely, and on the same time frame, the upward channel will not be broken without returning to the vicinity of the 150.00 level again. The currency pair will be affected today by the announcement of the number of weekly US jobless claims and the reading of the Producer Price Index, as well as investor sentiment towards risk-taking and expectations of global central bank policies.
Want to trade our USD/JPY Forex analysis and predictions? Here's a list of forex brokers in Japan to check out.