- At the start of trading this week, the USD/JPY exchange rate remained stable around the resistance level of 157.00.
- The yen had rebounded to around 156.7 against the dollar, recovering slightly from its lowest level in more than three weeks, as investors digested recent comments from Bank of Japan officials.
- Recently, Bank of Japan Governor Kazuo Ueda said it was necessary to re-anchor inflation expectations and warned that accurately estimating the neutral interest rate was a challenge in Japan.
Meanwhile, Bank of Japan Deputy Governor Shinichi Uchida said the end of the battle against deflation is in sight, adding that wages are likely to continue increasing. Last week, the Japanese yen came under pressure after data showed that Japan's core inflation rate slowed to 2.2% in April from 2.6% in March due to moderate food inflation, in line with expectations. Also, the key rate fell to 2.5% in April from 2.7% in March, falling for the second month in a row. Externally, strong US economic data and hawkish Federal Reserve meeting minutes weighing on sentiment around US interest rate cuts also weighed on the yen.
In other markets, European stock markets posted modest gains at the open, while Asian indices gained momentum as the day progressed. According to trading, the German DAX index rose 0.1% to 18713.43, and the CAC 40 index in Paris rose 0.2% to 8107.16. Meanwhile, markets in London were closed for a bank holiday, S&P 500 futures fell less than 0.1%, and the Dow Jones Industrial Average fell just over 0.1%.
The Nikkei 225 in Tokyo added 0.7% to 38,900.02 and the Kospi in Seoul jumped 1.2% to 2,722.99. Australia's S&P/ASX 200 Index rose 0.8% to 2,788.30. also, the Shanghai Composite Index rose 0.8% to 3,124.24 as the government reported corporate profits rose 4.3% year-on-year in the January-April period.
Hong Kong's Hang Seng index reversed early losses, gaining 1.2% to 18827.35 points. In Taiwan and South Korea, heavy buying of chip-related stocks pushed benchmark indices higher. As a result, the Taiex index ended trading up 1.1% after hitting a new record high. Shares of MediaTek, a semiconductor company that supplies chips for wireless communications, high-definition television, and mobile devices, jumped 7.5%.
In trading last Friday, the US S&P 500 index rose 0.7%, recovering all its losses in the previous two days. It made slight gains for the week, extending its streak of weekly gains to five, and sitting just below the record it set on Tuesday. The Dow Jones rose less than 0.1% and the Nasdaq Composite gained 1.1% to 16,920.79, surpassing its all-time high earlier in the week.
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USD/JPY Technical Analysis and Expectations Today:
Our view on the technical performance of the USD/JPY exchange rate remains unchanged. The general trend is still upward. The performance will remain the same until a genuine Japanese intervention occurs in the forex markets to prevent further depreciation of the currency, which harms the Japanese economy. According to the performance on the daily chart above, the trend is upward, and the nearest resistance levels are 157.60 and 158.40, respectively. Ultimately, it should be noted that Japanese intervention will trigger strong profit-taking selloffs, which may shift the pair's direction to a downward trend in a short period.
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