USDJPY is slightly below its highest level since November 2022.
The USDJPY pair begins the new week on a sour note, oscillating in a narrow trading zone around mid-146.00s during the Asian session. Slightly below its highest level since November 2022. Which was reached on Friday.
The Fed-BoJ policy divergence forecast continues to give some support and favors USDJPY bulls.
The US Dollar (USD) extends its recent strong advances to a nearly three-month high. Boosted by Federal Reserve (Fed) Chair Jerome Powell’s hawkish words, which are regarded. As serving as a catalyst. The USDJPY pair is benefiting from a tailwind. Powell stated in a keynote talk at the Jackson Hole Symposium. That the US central bank may need to hike interest rates further to calm still too high inflation. And that policy makers will move cautiously in deciding whether to tighten further or maintain the policy rate constant. The comments reinforced market expectations for another 25 basis point hike by the end of the year. And remained supportive of rising US Treasury bond rates. Which sustain the Greenback.
Bank of Japan (BoJ) Governor Kazuo Ueda stated that Japan’s underlying inflation remained somewhat below the 2% objective.
In contrast, Bank of Japan (BoJ) Governor Kazuo Ueda stated that Japan’s underlying inflation remained somewhat below the 2% objective. And that the central bank would maintain its present ultra easy monetary policy settings. Ueda also stated that inflation is projected to rise. From here, things will only get worse. This comes as statistics released on Friday revealed that consumer prices in Tokyo, Japan’s capital city, rose at a slower than expected rate in August, implying that the BoJ may maintain the status quo until next summer.
Fears of intervention turn out to be the single element acting as a headwind and limiting the upside.
The divergence in Fed BoJ policy outlook turns out to be another reason supporting the USDJPY pair. However intervention worries prevent bullish traders from putting new wagers, limiting the upside for the time being.
Nonetheless, theses mentioned fundamental background indicates. That the path of least resistance for spot prices is upward. As a result, any major corrective downturn may still be viewed as a buying opportunity. And will most likely stay cushioned. Moving forward, no market moving market data is scheduled for release. The USD is at the mercy of US bond rates following the release from the US on Monday. This, in turn, may offer some momentum to the USDJPY pair. Ahead of this week’s key US macro data. Which is slated at the start of a new month. Including the closely watched monthly jobless numbers popularly known as the NFP report on Friday.
