- Euro recovers to new all-time highs at 146.50.
- The yen, unable to take advantage of the dollar’s weakness, remains in free fall.
- The market is pending the intervention of the BOJ.
The Euro has opened the week strongly, accelerating its recovery beyond 145.60, reaching 146.50 so far, its highest level since January 2015.
Japanese yen still in free fall
The yen has been the only major currency that has failed to benefit from US dollar weakness amid improving risk appetite and has extended its decline, with USD/JPY hitting new 32-year lows.
Investors remain alert to the possibility of an intervention by the Bank of Japan to strengthen the yen. Indeed, the yen has risen above the level that triggered a BOJ intervention last month, and the Japanese government has reiterated its commitment to a “firm response” to prevent a rapid decline in the yen.
The yen is under pressure from the divergence in monetary policy between the Bank of Japan and the rest of the world’s major central banks, and especially the Federal Reserve.
The Fed is expected to raise interest rates by 0.75% for the fourth consecutive time in November, while the Japanese bank maintains an ultra-easy policy that is crushing demand for the Japanese currency.
Technical levels to watch
Source: Fx Street
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