Japanese yen volatility has returned as traders unwind record short positions ahead of US CPI. With USD/JPY testing major resistance below 163 and intervention risks lingering, futures positioning suggests gains may become harder to come by.
For a while now my favored major pair for USD-strength is USD/JPY, and that remains in force as we trade into the second half of the year. At this point USD/JPY is on the verge of fresh 40-year highs and the next obvious waypoint along the way is the 165.00 handle that was last in-play back in 1986.
Rising geopolitical tensions provided support to the American currency.
USD/JPY and the U.S. Dollar Index are approaching critical technical levels. Razan Hilal, FOREX.com Market Analyst, explains why the Dollar Index holding above 100 could fuel a major USD/JPY breakout toward 170 and beyond, while identifying the key support levels that could instead trigger a bearish reversal for both the dollar and the yen.
Crude oil prices rose at the start of the week after President Trump said the ceasefire was over and fighting had started again. Stock markets fell, while USD/JPY moved back toward recent highs.
Rising inflation and bond yields keep another BOJ rate hike in focus, while USDJPY, GBPJPY and EURJPY remain bullish above key support levels.
The American currency is losing ground ahead of the weekend.
USDJPY managed to pass above the short-term resistance zone of 161.95 which shows a strong advance still ongoing. Prices fell toward 160.50-70 on the suspected intervention before bouncing back.
USD/JPY fell to 161.67 on Friday, with the yen fully recovering its losses from the beginning of the week. Market participants are once again increasing expectations of possible intervention by Japanese authorities, following the national currency's recent move to nearly 40-year lows.
USD/JPY Price Forecast: Dollar finds resistance at the 161.75 previous support
USDJPY (The yen) halts the upturn USDJPY (The yen) bounced against the dollar after finding resistance at the 162.75 level. • The latest move above 162.50 has prompted some buyers to cover and could pave the way for a bearish continuation.
Japanese assets are rallying after Finance Minister Satsuki Katayama said the government wants to encourage Japan's GPIF, the world's largest pension fund, to invest substantially more domestically.