- USD/JPY is trading lower as concerns about the global economy and geopolitical events persist.
- Markets anticipate a one-time Fed rate hike, contrary to officials’ double prediction.
- Lower US Treasury yields and official comments support the yen, pushing USD/JPY lower.
The pair USD/JPY is holding firm around the 143.40 area after falling to a daily low of 142.93 on renewed concerns over a global economic slowdown, while geopolitical events over the weekend weighed on investor sentiment. At the time of writing, the USD/JPY pair is trading at 143.46, down 0.16%.
Market apathy at Fed rate cut; Dallas Fed manufacturing index improved, but still portends a ‘hard landing’
US stocks turned negative while the Japanese Yen (JPY) strengthened following comments from Japanese authorities regarding excessive currency movements. Monday had a light economic calendar in the United States (US), with the release of the Dallas Fed Manufacturing Index for June, which stood at -23.2, showed some improvement but remained in recessionary territory. Although still in contraction, it was the most significant advance in three months.
Meanwhile, traders dismissed the possibility of a US Federal Reserve (Fed) rate cut, as the CME’s FedWatch tool shows. However, market agents expect a rise in interest rates of a quarter of a percentage point, against the two forecasts by Fed officials, with probabilities for July of 74.4%, as shown by the FedWatch tool from the CME.
Meanwhile, fighting between Russian mercenaries and Putin’s army ended on Sunday after the Wagner Group army halted its advance on Moscow, threatening to remove incompetent and corrupt Russian commanders it blames for bungling in war.
On the other hand, Vice Finance Minister for International Affairs Masato Kanda commented that the recent weakening of the yen was too “quick and one-sided”, helping to offset previous yen losses and sending the USD/JPY pair lower. its low of 142.93 before making up some of the lost ground.
Elsewhere, falling US Treasury yields held out a lifeline for the yen, as the 10-year Treasury note yields 3.717%, down two and a half basis points (bp), a headwind for the dollar and USD/JPY. The Dollar Index, a basket of six currencies against the US dollar (USD), fell 0.17% to 102.699.
USD/JPY Price Analysis: Technical Perspective
From a technical point of view, USD/JPY is poised to post additional gains after breaking resistance at the November 22 daily high at 142.24. That exacerbated USD/JPY’s rally above 143.00 towards a year-to-date high of 143.878. But verbal intervention by the Japanese authorities triggered a correction. However, if USD/JPY breaks above 144.00, the next stop would be the daily low on Oct 27 of last year at 145.10, before rallying to the daily high on Nov 10 at 146.59. Conversely, USD/JPY needs to dip below 143.00 and 142.24 to extend its losses towards sold support at the 20-day EMA at 140.90.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
