USD/JPY edged higher to 157.90 on Tuesday, with the yen remaining within a narrow range. Markets are assessing the direction of Prime Minister Sanae Takaichi's government, which continues to pursue stimulative fiscal policy despite concerns over the weak yen and the funding of government spending.
USD/JPY edges higher as markets focus on data and the BoJ
It's been a slow climb-higher in USD/JPY over the past three weeks and from the weekly chart, there remains a tonality shift ever since the dual intervention in late-July. So, it would be far too early to assume that the threat of sell-offs and unwind is completely gone and as the pair re-approaches the 160.00 handle, the very real question is whether or not policymakers will want to burn the dry powder to defend a lower-high.
The American currency tested yearly highs as rally continued.
Indecision continues to be a defining feature of the yen's recent price action. This can be seen in USD/JPY, which has posted average fluctuations of just 0.4% over the last three trading sessions, failing to establish a clear direction and reinforcing an increasingly evident neutral bias.
USDJPY managed to add more bonus above 157.85 while drop pressure still overshadow the market as traders expect an intervention from BOJ anytime Intraday showing resistances at 159.00 and 160.00 while a drop wave may hit the market toward 156.40 and 153.90 Above 160.00 more advance is likely with resistances at 160.90 and 161.95 […]
Technical outlook: Gold, EUR/USD, USD/JPY [Video]
USD/JPY Price Forecast: Consolidates below 158.00 as bullish bias persists
TL;DR: The Nikkei 225 is closing in on a fresh record near 72,831.73, but unlike June's rally—when USD/JPY ran alongside it to 163.97—a faster BoJ tightening cadence, a more patient Fed, credible intervention risk and the absence of a fresh oil shock mean USD/JPY is unlikely to follow through the 160 zone this time.
The dominant rates relationship with USD/JPY deteriorated abruptly last week, coinciding with the calendar turn and the start of the second half of Japan's fiscal year.
The American currency moved away from session lows as traders bought the dip.
USD/JPY Price Forecast: Remains supported by 20-day EMA ahead of US NFP