- USD/JPY struggles for clear directions amid mixed concerns, anxiety ahead of key events.
- Japan’s National Consumer Price Index (CPI) jumps to eight-year high in August.
- Chatters surrounding BOJ intervention, stimulus join sluggish yields to restrict immediate moves.
- Second-tier US data may entertain traders but Fed vs. BOJ divergence is the key.
USD/JPY struggles to defend 143.00, despite a recent pick-up during early Tuesday morning in Europe. In doing so, the yen pair portrays the market’s indecision ahead of the key monetary policy meeting decision from the US Federal Reserve (Fed) and the Bank of Japan (BOJ).
It’s worth noting that the eight-year high Japan inflation data, as per the National CPI YoY for August, joins the weaker yen to push the Bank of Japan (BOJ) towards monetary policy change even if the doves are tightly holding the reins. Strong yields on the Japanese Government Bonds (JGBs) also underpin hawkish bias for the BOJ.
Even so, Reuters said that the Bank of Japan is set to maintain ultra-low interest rates and its dovish policy guidance on Thursday, a decision that comes hours after its US counterpart's expected big rate hike and could trigger a fresh bout of yen selling. The BOJ preview also mentioned, “At a two-day policy meeting ending on Thursday, the BOJ is set to maintain its short-term rate target at -0.1% and that for 10-year government bond yields around 0%. Kuroda will hold a news conference after the meeting.”
Elsewhere, Japanese Finance Minister Shunichi Suzuki said on Tuesday that he “expects the Bank of Japan (BOJ) to guide policy appropriately taking prices and the economy into account.” On the same line were comments from the country’s Chief Cabinet Secretary Hirokazu Matsuno said that the “decision on reserve funds tries to mitigate the impact of price increases.”
Furthermore, Japan’s Ministry of Finance (MOF) stated earlier that the government will spend 3.48 trillion yen in budget reserves to cope with price hikes and covid-19.
Alternatively, downbeat US housing numbers and multi-day low of the US inflation expectations, as per the breakeven inflation rate of the St. Louis Federal Reserve (FRED), seem to challenge the US dollar buyers. However, economic fears emanating from China and Europe, as well as the return of the full markets, put a carpet under the US dollar.
Amid these plays, the S&P 500 Futures fade the previous day’s bounce off a two-month low around 3,920 whereas the US 10-year and 2-year Treasury yields remain sidelined at the highest levels since April 2011 and October 2007 in that order.
Moving on, USD/JPY traders will pay attention to the Fed versus BOJ divergence to determine the short-term directions of the pair. If the Fed chooses to talk down the further rate hikes and the BOJ sounds cautiously dovish, the odds of witnessing a pullback in prices can’t be ruled out.
Technical analysis
Despite the latest inaction, a sustained downside break of the 10-DMA, around 143.40 by the press time, joins multiple failures to cross the 145.00 hurdle to keep USD/JPY bears hopeful.
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 holds gains near 0.6600 as RBA Governor Bullock speaks
AUD/USD clings to gains near 0.6600 early Tuesday. The Aussie fails to find any inspiration, as the RBA holds the key interest rate at 4.35%. Strong China's Caixin Services PMI data supports the Aussie amid a steady US Dollar and a tepid risk tone. RBA Governor Bullock's presser gets underway.
USD/JPY: Rebound remains capped below 152.50 amid cautious mood
USD/JPY consolidates the bounce below 152.50 in Asian trading on Tuesday, tracking the US Dollar price action. The pair's upside remains capped by strong Japanese PMI data and a cautious market mood. Traders remain wary as Americans head to polls this Tuesday.
Gold traders appear non-committal on the US election day
Gold price is miring in five-day lows near $2,730 in Asian trading on Tuesday, lacking a clear direction. Traders remain wary and refrain from placing fresh bets on Gold price on the US presidential election day.
Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections
MAGA trades slightly down to around $3.4 on Tuesday after rallying more than 20% since Sunday. The former President Donald Trump-based memecoin is poised for further gains as daily active addresses and network growth metrics rise, signaling increased network usage and adoption.
US presidential election outcome: What could it mean for the US Dollar? Premium
The US Dollar has regained lost momentum against its six major rivals at the beginning of the final quarter of 2024, as tensions mount ahead of the highly anticipated United States Presidential election due on November 5.
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.