- USD/JPY bulls take a breather after rising to the highest levels since 2002.
- Options market signals portray consecutive three weeks of bullish bias.
- Japan’s Matsuno shows readiness to act but sounds vague on FX market intervention.
- Hawkish Fed bets join China-linked headlines to propel prices.
USD/JPY remains on the front foot around a two-decade high, despite recent inaction around 135.00. That said, the quote’s recent consolidation could be linked to the comments from Japan’s Chief Cabinet Secretary Matsuno, as well as the market’s anxiety ahead of Wednesday’s US Federal Reserve (Fed) monetary policy meeting.
Japan’s Chief Cabinet Secretary Matsuno showed the capacity to take appropriate actions on FX market movements if necessary. “Japan's govt will respond appropriately to exchange rate following G7 agreement on currencies while keeping close communication with the US, other authorities,” adds the policymaker.
On the other hand, the CME FedWatch tool shows 26.8% chance of a 75 bp Federal Reserve rate hike at the June 15 meeting, which in turn suggests high hopes from the Fed. As a result, the US Dollar Index (DXY) dribbles around a one-month high.
Additionally supporting the USD/JPY bulls are the options market signals as the weekly risk reversal (RR), the spread between calls and puts, rose for the third consecutive week by the end of Friday, +0.220 at the latest. It should be noted, however, that the daily RR dropped for the second day in a line down -0.210 and test the pair buyers.
Looking forward, a light calendar on Monday may challenge USD/JPY bulls but the risk catalysts, like escalating covid woes from China and the recent Sino-American tussles over Taiwan can underpin the pair’s upside momentum.
Technical analysis
The USD/JPY pair’s ability to cross the three-day-old resistance, around 134.75-80, directs it towards the year 2002’s high surrounding 135.15-20. However, the pair’s upside past 135.20 appears difficult amid overbought RSI.
Meanwhile, the resistance-turned-support around 134.75-80 restricts the yen pair’s immediate downside ahead of an ascending support line from late May, around 133.85 by the press time.
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
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.