USDJPY continues to strengthen.
USDJPY is trading at 148.86 in the European session, down 0.31% on the day as of writing. On Thursday, the yen reached 148.50, its highest level since May 11.
Yen continues to hammer the US Dollar.
Only three weeks ago, the yen appeared to be dead in water. USDJPY was trading slightly below 162, its highest level in over four decades. Since then, the yen has skyrocketed, up 7.9%, including 3.1% this week.
What is driving the yen extraordinary recovery?
First, the Bank of Japan increased interest rates this week to 0.25%. Although rates are still at low levels, this rate increase, The second since March demonstrates that the BoJ is gradually returning to normalcy after decades of ultra-loose accommodative policy.
The BoJ also said that it will reduce its bond purchases, another tightening measure.
Second, investors have become less enthused about the US dollar as a September cut becomes increasingly imminent, and they are looking to park their assets abroad.
The US economy is displaying signals of weakness, such as this week’s ISM manufacturing PMI for July, which showed the largest fall since November 2023. This has pushed funds away from the US currency and toward safe-haven assets like the yen. Today’s nonfarm payrolls are predicted to decline from 206 thousand to 175 thousand, which may further strengthen the yen. The cost of the US dollar.
This week’s BoJ rate hike demonstrated that change is afoot in Japan, and the government’s annual white paper on economic and fiscal policy, released today, bolstered that view. According to the white paper, Japan is exhibiting indications of emerging from deflation, with businesses passing on costs to consumers as a result of the yen’s severe depreciation.
USDJPY Technical
USDJPY continues to fall below support. Previously, it dropped below support at 149.19 and is now testing support at 148.72. Below, there is support at 149.59.
150.03 and 150.44 are the following resistance levels.
