- USD/JPY surges to a new YTD high of 146.68, buoyed by Wall Street’s upbeat opening and dovish comments from BoJ Governor Kazuo Ueda.
- Despite a dip in US 10-year Treasury yields, the pair maintains its bullish momentum, reflecting the Fed’s hawkish stance on further tightening.
- A packed economic calendar could introduce volatility, including key US and Japanese indicators.
USD/JPY resumes its uptrend, prints a new year-to-date (YTD) high of 146.68, on an upbeat sentiment, with Wall Street opening the week on a higher note amidst thin liquidity conditions due to the UK’s Summer Bank Holiday. Hence, the Japanese Yen (JPY) extended its losses to three straight sessions spurred by dovish remarks by the Bank of Japan’s (BoJ) Governor Kazuo Ueda. The pair exchanges hands at 146.60.
Japanese Yen extends its losses as Wall Street climbs and BoJ’s Ueda remains dovish
US equities resumed their uptrend following hawkish remarks by the US Federal Reserve (Fed) Chair Jerome Powell at Jackson Hole. Despite being data-dependent, Powell’s words reinforced the US central bank hawkish stance, which triggered a leg-up in the USD/JPY pair. He added that robust economic expansion and the constrained labor market would warrant further tightening by the Fed if those economic indicators don’t show signs of easing.
The USD/JPY advance stalled as US Treasury bond yields began to lose ground, particularly the US 10-year Treasury Note, with its coupon sliding two basis points at 4.22% and undermining the greenback.
On the Japanese front, the BoJ Governor Kazuo Ueda said that underlying inflation is still below target and justified the current “dovish” monetary policy stance by the BoJ, even though July’s core consumer inflation rose by 3.1%. Ueda added that inflation “is expected to decline.”
Although the BoJ tweaked its Yield Curve Control (YCC) to a 0.50%-1% flexible target, the 10-year Japanese Government Bonds (JGBs) yield has failed to break higher, which could shift the USD/JPY pair bias bearish. Once the BoJ signals it is ready to normalize its monetary policy, the USD/JPY could resume lower after posting gains of 11.85% in the year.
A busy economic calendar could rock the boat in the week ahead. The US docket would feature JOLTs report, the CB Consumer Confidence, the release of the Gross Domestic Product, the Fed’s preferred gauge for inflation, the core PCE, US employment data, and business activity. On the Japanese front, speeches by two BoJ members.
USD/JPY Price Analysis: Technical outlook
The US Dollar rally against the Japanese Yen is set to continue if not for vocal expressions of Japanese authorities threatening to intervene in the FX markets. After hitting a new YTD high, the USD/JPY could extend its gains towards the November 3 high at 148.45, followed by the October 31 high at 148.84, before piercing 149.00. The major’s downside risks emerge at the Tenkan-Sen line at 145.61. If breached, the next stop would be the August 23 swing low of 144.54.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Australian Dollar steady as markets asses minor US data
The AUD/USD regained positive traction on Thursday following the overnight pullback from a one-week top. A softer US Dollar and a positive risk tone benefited the Aussie, as well as the Reserve Bank of Australia’s (RBA) hawkish stance.
EUR/USD: Further losses now look at 1.0450
Further strength in the US Dollar kept the price action in the risk-associated assets depressed, sending EUR/USD back to the 1.0460 region for the first time since early October 2023 prior to key releases in the real economy.
Gold faces extra upside near term
Gold extends its bullish momentum further above $2,660 on Thursday. XAU/USD rises for the fourth straight day, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war. Markets await comments from Fed policymakers.
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.