For the second day in a row, the price of the US dollar against the Japanese yen “USD/JPY” is trying to rebound higher to recover from the mid-week losses, which affected the support level of 147.15, the lowest for the currency pair in two months. Yesterday, the US dollar/JPY currency pair rebounded towards the resistance level of 149.74, supported by the positivity of the economic data results. Recently, the currency pair is stable around the 149.00 level at the time of writing the analysis on an American holiday that may affect liquidity in the markets as well as investors’ desire to take risks.
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The US dollar index stabilized at its lowest levels in approximately two and a half months after the minutes of the last meeting of the Federal Reserve (the US central bank) failed in displacing market expectations that the cycle of tightening monetary policy had ended. The minutes of the Federal Reserve meeting showed that the central bank would move “cautiously” and that “all participants in the meeting considered it appropriate to maintain” the current interest rate setting.
Meanwhile, Fed officials agreed they would raise US interest rates only if progress in controlling inflation falters, reiterating recent comments by policymakers that left the door open for further tightening even as markets move to price in cuts from early next year. Currently, markets are confident that the Fed will hold interest rates at its December meeting, while anticipating a roughly 30% chance of a rate cut as early as March, according to CME's FedWatch tool.
According to Forex market trading, The DXY dollar index, which measures the greenback's performance against a basket of other major currencies, settled at 103.58, near levels last seen in early September. So far, from the previous session's low of 103.17. At the same time, the Japanese yen is looking forward to its best week in four months, and the dollar is heading towards a weekly decline.
On the other hand, US Treasury bond yields, which strengthened the dollar, fell from multi-year highs reached in October as investors intensified their bets that the Federal Reserve had finished raising US interest rates after inflation slowed in the United States in the same month. Accordingly, Treasury yields fell again overnight, hovering around 4.40%, relieving additional pressure on the Japanese yen. Furth more, the speculation of that the Bank of Japan may exit negative interest rates as early as next year 2024 should help stabilize the yen price, the Japanese currency still faces strong headwinds. Recently, US data indicated the resilience of the world's largest economy, which reinforced the Federal Reserve's soft-landing rhetoric.
USD/JPY Technical analysis and Expectations Today:
As we mentioned before, the return of the price of the US dollar against the Japanese yen “USD/JPY” towards the psychological resistance of 150.00 is possible, and this may motivate the bulls to return to controlling the performance of the currency pair again. Therefore, prepare for stronger upward levels until there is Japanese intervention in the markets to prevent further collapse of the currency price, which will greatly harm the Japanese economy. Obviously, the discrepancy between the policy of the US Central Bank and the Bank of Japan will continue to motivate bulls to advance and support the possibility of buying the currency pair from every falling level. Currently, the closest support levels for the dollar against the Japanese yen are 147.90, 147.00, and 146.20, respectively. Shortly, considering that the American holiday today may affect the liquidity of the markets and, at the same time, the appetite of investors in trading.
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