The USDJPY is at its YTD high due to worries of Japanese intervention and inconsistent data from Tokyo.
USDJPY retests the year-to-date (YTD) high of 146.55, but there is little follow-through. Amid suspicions of Japanese officials intervening in the market to safeguard the Yen. Nonetheless, widespread risk aversion and aggressive Fed fears fuel the main currency pair’s early Thursday rally.
Hawkish Fed bets and economic uncertainty weigh on mood, supporting US Dollar gain.
Market confidence is deteriorating as traders fear an aggressive Fed stance in the face of global economic difficulties. The geopolitical/economic concerns emerging from China. As well as the lately mixed US statistics, may also weigh on morale.
The most recent Fed meeting minutes emphasized officials. ‘Despite a disagreement on the rate rise decision, the topic on inflation pressures continues. However, the Minutes also indicated that most policymakers wanted to support the fight against ‘sticky’ inflation. US Industrial Production tracked positive Retail Sales statistics, which helped the markets rationalize the Fed’s hawkish stance.
Furthermore, China’s home prices fell for the first time this year in June, adding to concerns about another bond market crisis in the Dragon Nation, as the largest private realtor Country Garden struggles to meet bond payments.
To reflect the sentiment, S&P500 Futures fell to their lowest level in five weeks, hovering around the multi-day low of 4,415-20 at the time of publication. In doing so, the US stock futures track the losses suffered by the Wall Street bench mark. It’s worth mentioning that US 10-year Treasury note rates have risen to its highest level since October 2022, hovering around 4.298% at the time of writing. It should be highlighted that such a high level of bond coupons sparked worries of an economic downturn and drowned out riskier assets while also supporting the US Dollar in late 2022.
Risk catalysts and mid-tier US data are looking for unambiguous paths.
On a side note, the mainly stronger US data and mixed Japan statistics have recently put pressure on the USDJPY pair. Earlier in the day, Japan reported mixed results for the July Merchandise Trade Balance and optimistic Machinery Orders for June, bolstering the Bank of Japan (BoJ) officials’ support for the ultra-easy monetary policy.
Moving forward, risk catalysts will be critical in deciding the AUDJPY’s near-term direction. with a modest schedule elsewhere.
USDJPY Technical Outlook
To challenge USDJPY buyers, overbought RSI joins rising resistance line from July 21, near to 146.55 by press time. However, the pullback movements remain illusive past June’s top of 145.05.
