USD/JPY Surges to Nearly Three-Month High
- BoJ Rate-Hike Uncertainty Weighs on JPY
- Bets for Smaller Fed Rate Cuts Support USD
The USD/JPY pair continues its upward trend, rising to a near three-month high on Wednesday as the Japanese Yen (JPY) struggles against the US Dollar (USD). The uncertainty surrounding the Bank of Japan’s (BoJ) interest rate hikes and Japan’s upcoming general election on October 27 are key factors influencing this movement.
BoJ Rate-Hike Uncertainty
With no clear communication from Japanese authorities regarding interest rate hikes, the JPY is under pressure. Recent polls suggesting potential changes in Japan’s ruling party after the election raise doubts about the BoJ’s ability to raise rates further this year, weighing heavily on the JPY.
Smaller Fed Rate Cuts Support USD
On the other hand, the USD remains strong due to expectations of smaller rate cuts by the Federal Reserve (Fed). Speculations about former President Donald Trump’s potential return and the impact of inflation-generating tariffs could lead the Fed to take a less aggressive stance on policy easing, further supporting the USD.
Technical Analysis
From a technical perspective, the USD/JPY pair’s recent breakout above key resistance levels signals a bullish trend. However, caution is advised as the Relative Strength Index (RSI) indicates slightly overbought conditions. The pair is likely to continue its upward momentum towards key resistance levels.
Key Levels to Watch
- The 152.00 mark acts as immediate support, with potential for further decline towards the 200-day Simple Moving Average (SMA) near 151.30.
- A break below 151.00 could present a buying opportunity, limiting losses and maintaining a bullish bias.
Conclusion
The USD/JPY pair’s recent surge to a three-month high reflects the ongoing dynamics between the BoJ’s rate-hike uncertainty and the Fed’s policy outlook. While technical indicators suggest further upside, caution is advised as geopolitical risks and market sentiment could influence the pair’s movements in the near term.