Japanese Yen Struggles to Capitalize on Hawkish BoJ Minutes

  • The Japanese Yen (JPY) fails to capitalize on the hawkish Bank of Japan (BoJ) minutes-led intraday uptick.
  • BoJ rate-hike uncertainty and risk-on impulse weigh heavily on the JPY.
  • US election results trigger a sharp rise in US bond yields and the USD.

The Japanese Yen (JPY) has seen a modest recovery against the US Dollar (USD), with the USD/JPY pair hovering around the mid-153.00s during the European session on Wednesday. Despite the hawkish Bank of Japan (BoJ) meeting minutes indicating possible interest rate hikes, fears of Japanese intervention in the markets to support the JPY have tempered gains. Additionally, a pullback in US Treasury bond yields has prompted some USD profit-taking, benefiting the lower-yielding JPY. However, concerns over Japan’s political landscape and the risk-on sentiment could limit the JPY’s gains. The potential victory of Republican Donald Trump in the US election also favors the USD bulls, further impacting the USD/JPY pair.

Market Movers: Factors Influencing the Japanese Yen and USD

  • The BoJ plans gradual policy rate increases, supporting the JPY, but uncertainties remain due to overseas economic factors and political challenges in Japan.
  • The USD rallies as Donald Trump gains an early lead in key swing states, leading to a surge in the USD/JPY pair.
  • Speculations about potential inflation-generating tariffs and deficit-spending concerns fuel the rise in US Treasury bond yields, benefiting the USD.

Technical Outlook for USD/JPY Pair

Technically, a break above the 153.85-153.90 region and the 154.00 mark could trigger further bullish momentum for the USD/JPY pair. Oscillators on the daily chart are in positive territory, suggesting a potential climb towards the 154.60-154.70 area and the 155.00 psychological level. On the downside, support lies at 152.30, followed by 152.00 and 151.30-151.25. A breach below 150.00 could shift the bias in favor of bearish traders.

Federal Reserve FAQs

  • The Fed adjusts interest rates to achieve price stability and full employment, impacting the strength of the USD.
  • The Federal Open Market Committee (FOMC) makes monetary policy decisions at eight policy meetings per year.
  • Quantitative Easing (QE) and Quantitative Tightening (QT) are non-standard policy measures used by the Fed in extreme situations.
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