- USD/JPY hits a fresh YTD peak on Thursday and remains well supported by a bullish USD.
- The hawkish FOMC meeting minutes reaffirm bets for one more rate hike and lift the buck.
- The BoJ's dovish stance, along with the widening US-Japan yield spread, weighs on the JPY.
The USD/JPY pair builds on this week's breakout momentum through the 145.00 psychological mark and climbs to a fresh YTD top during the Asian session on Thursday. Spot prices currently trade around mid-146.00s, up 0.10% for the day, and remain well supported by the underlying bullish sentiment surrounding the US Dollar.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, touches its highest level since July 6 and validates the overnight break through the very important 200-day Simple Moving Average (SMA) for the first time since November 30. The stronger US macro data released on Wednesday – Housing Starts and Industrial Production figures – and a more hawkish Federal Reserve (Fed) continue to act as a tailwind for the buck. This, along with the Bank of Japan's (BoJ) dovish stance weighs on the Japanese Yen (JPY) and lends additional support to the USD/JPY pair.
The minutes of the July 25-26 FOMC policy meeting signalled that a further rate hike remains in play later this year. Moreover, Fed officials no longer expect a “mild” recession this year, reaffirming market bets for higher rates for longer rates, pushing the US Treasury bond yields higher. In fact, the yield on the benchmark 10-year US government bond jumps to its highest level since October and is seen underpinning the USD. The resultant widening of the US-Japan rate-differential, meanwhile, is seen as another factor driving flows away from the JPY and pushing the USD/JPY pair higher.
Spot prices, meanwhile, have moved beyond the level that triggered an intervention by Japanese authorities in September and October last year. Moreover, Japan's top forex diplomat Masato Kanda said on Tuesday that he would take appropriate steps against excessive currency moves. Japan's Finance Minister Shunichi Suzuki, however, said that authorities are not targeting absolute currency levels when it comes to intervening in the market. Nevertheless, speculations that the recent weakness in the JPY might prompt some jawboning from authorities could cap the USD/JPY pair.
Apart from this, the prevalent risk-off environment might lend some support to the safe-haven JPY and hold back traders from placing fresh bullish bets. Market participants now look to the US economic docket, featuring the release of the usual Weekly Initial Jobless Claims data and the Philly Fed Manufacturing Index later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the USD/JPY pair.
Technical levels to watch
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
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.