The Japanese Yen (JPY) has pulled back from its recent six-month highs as the unwinding of carry trades slowed down. Despite this retreat, the JPY strengthened against the US Dollar (USD) on Tuesday, fueled by expectations of further rate hikes by the Bank of Japan (BoJ).
The BoJ recently raised its short-term rate target by 15 basis points, signaling a willingness to tighten monetary policy. Additionally, the central bank announced a plan to reduce its monthly purchases of Japanese government bonds, further supporting the JPY.
On the other hand, the USD faces challenges as expectations of a 50-basis point rate cut by the US Federal Reserve in September have been on the rise. The CME FedWatch tool indicates a 74.5% probability of this rate cut, a significant increase from previous expectations.
Market Analysis: Japanese Yen Strengthens Amid BoJ’s Hawkish Stance
- Japan’s Labor Cash Earnings data for June showed a significant year-on-year increase, indicating a positive trend in the economy.
- Fed officials have expressed confidence in US inflation reaching target levels, hinting at possible rate cuts to come.
- The US ISM Services PMI for July exceeded expectations, pointing towards a resilient economy.
Technical Insights: USD/JPY Approaches Key Resistance Levels
USD/JPY is currently trading around 145.20, with a potential rebound on the horizon. The pair may test support at 140.25 before facing resistance at the nine-day EMA around 149.22.
Breaking above the EMA could shift the bias in favor of USD, with resistance levels at 154.50 and 155.58 to watch out for.
USD/JPY: Daily Chart
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against major currencies, highlighting the Yen’s recent performance.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.00% | -0.05% | 0.77% | -0.08% | -0.18% | -0.14% | 0.36% |
Japanese Yen FAQs
Learn more about the Japanese Yen and its role in the global economy with these FAQs:
- What factors influence the value of the Japanese Yen?
- How does the Bank of Japan impact the Yen’s value?
- Why is the Japanese Yen considered a safe-haven investment?