🎈 Up Big Today: Find today's biggest gainers with our free screenerTry Stock Screener

Yen Jumps On Lower U.S. Yields

Published 07/25/2022, 08:47 AM
Updated 07/09/2023, 06:31 AM
USD/JPY
-
DX
-
US10YT=X
-

The yen is lower at the start of the week. USD/JPY is trading at 136.53, up 0.34%.

For a change, the yen enjoyed a winning week against the dollar, the first in two months. During that time, USD/JPY has soared about 7.9% and touched a 20-year high of 139.39 earlier in July. This led to speculation that the yen might break above another milestone, this one being the 140 level. However, the yen has since settled down.

The driver behind USD/JPY remains US yields, as the Bank of Japan continues to exercise strict yield curve control. An aggressive Federal Reserve has pushed US yields higher, widening the rate differential and causing misery for the yen. However, US yields have corrected lower, allowing the yen to make a recovery and move some distance from the symbolic 140.00 line. If US yields move sharply lower this week, the USD/JPY could fall as low as 132.00.

The yen’s most recent slide has shown that the BoJ and Japan’s Ministry of Finance appear unwilling to intervene in order to prop up the yen, with Japanese officials focused on maintaining loose policy in order to support the ailing Japanese economy. USD/JPY broke above 130 and 135 with barely a protest out of Tokyo, which leads me to believe that if there is a line in the sand when it comes to the yen, it is not at 140.00. This means that many market participants might choose to remain long on USD/JPY and try to test 140.00, although that remains a risky stance.

The week kicks off with the BOJ minutes from the June meeting and BoJ Core CPI, the Bank’s preferred inflation indicator. The index has been on the rise and climbed to 1.5% in May, up from 1.4% a month earlier.

USD/JPY Technical

  •  USD/JPY has support at 134.81 and 133.53
  • There is resistance at 136.84, followed by 138.12

USD/JPY Daily Chart

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.