USD/JPY Is the Yen back?

18 de out. de 2023

The USD/JPY exchange rate is holding around 149.75 during the early Asian trading hours, supported by an increase in US Treasury bond yields. Investors are on alert for the possibility of intervention by Japanese authorities near the 150.00 level. Despite a brief dip towards 148.80, the pair quickly recovered around 149.50, anticipating the upcoming inflation estimates from the Bank of Japan (BoJ). Bloomberg reported a potential increase in inflation forecasts for 2023, indicating BoJ's confidence in wage growth.
Hopes of Japanese intervention in the currency market are fading due to concerns of Japanese authorities about further Japanese Yen sales and volatility. Despite historical volatility spikes, interest in the Yen is limited due to BoJ's expansive monetary policy.
S&P500 futures have experienced significant losses due to escalating tensions in the Middle East, reflecting a bearish market sentiment. The US Dollar Index (DXY) retreated from 106.50 as Federal Reserve (Fed) members support keeping interest rates unchanged in November. Mary Daly, President of the Federal Reserve Bank of San Francisco, likened the increase in yields to a 25 basis point hike but emphasized the risk of further rate hikes that could lead to a recession. Additionally, the market has moved only around 30 pips in the last five sessions. It appears to be forming a bearish trendline, suggesting a potential downward movement with a target around 148.90. Let me know your thoughts. Regards, Nicola, CEO of Forex48 Trading Academy.