Japanese Yen weakens further below 150.00 against USD

Japanese Yen weakens further below 150.00 against USD

  • The Japanese Yen attracts some sellers on Tuesday, though the downside seems limited.
  • Rising bets for another BoJ rate hike in December should act as a tailwind for the JPY.
  • Geopolitical risks, Trump’s tariff threats and suppressed US bond yields favor JPY bulls. 

The Japanese Yen (JPY) extends its steady intraday descent through the Asian session on Tuesday, which, along with a modest US Dollar (USD) strength, lifts the USD/JPY pair further beyond the 150.00 psychological mark. However,  speculations that the Bank of Japan (BoJ) could hike interest rates again in December might hold back the JPY bears from placing aggressive bets. Furthermore, concerns about US President-elect Donald Trump’s tariff plans, persistent geopolitical risks and the recent decline in the US Treasury bond yields should act as a tailwind for the lower-yielding JPY. 

Meanwhile, the USD bulls might opt to wait for more cues about the Federal Reserve’s (Fed) rate cut path before positioning for any further gains. This might further contribute to capping the upside for the USD/JPY pair as the market focus remains on important US macro releases scheduled at the beginning of a new month, including the Nonfarm Payrolls (NFP) report. Apart from this, Fed Chair Jerome Powell’s speech will be looked upon for the interest rate outlook in the US. This, in turn, will influence the USD price dynamics and determine the near-term trajectory for the currency pair. 

Japanese Yen remains on the back foot; hawkish BoJ expectations might help limit deeper losses

  • Tokyo November Consumer Price Index (CPI) released last week suggested that the underlying inflation is gaining momentum and lifted expectations for a December rate hike by the Bank of Japan. 
  • BoJ Governor Kazuo Ueda said on Saturday that the central bank will adjust the degree of monetary easing at the appropriate time if it becomes confident that the underlying inflation rises toward 2%.
  • Russia fires at least 60 North Korean missiles against Ukraine. North Korean leader Kim Jong Un vowed that his country will invariably support Moscow until Russia achieves a great victory in Ukraine.
  • US President-elect Donald Trump has pledged to impose big tariffs against America’s three biggest trading partners and ‘BRICS’ nations, raising the risk of a second wave of a global trade war. 
  • Trump opposes and will block Nippon Steel-US Steel deal as President. 
  • Investors remain concerned that Trump’s tariff plans and expansionary policies will reignite inflationary pressures and force the Federal Reserve to stop cutting rates or possibly raise them again. 
  • The Institute of Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) rose to 48.4 in November amid hopes of business-friendly policies from the Trump administration.
  • According to the CME Group’s FedWatch Tool, traders are currently pricing in a nearly 75% chance that the US central bank will lower borrowing costs again by 25 basis points later this month. 
  • The benchmark 10-year US Treasury bond yield had fallen to its lowest levels since late October, narrowing the US-Japan yield differential, which should also benefit the lower-yielding Japanese Yen.
  • Investors keenly await important US macro releases scheduled at the beginning of a new month for more cues about the Fed’s future rate-cut path, which will influence the USD and the USD/JPY pair. 

USD/JPY looks to build on strength above the 150.00 psychological mark, not out of the woods yet

From a technical perspective, last week’s breakdown below the 38.2% Fibonacci retracement level of the September-November rally could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone, suggesting that the path of least resistance for the USD/JPY pair remains to the downside. That said, a modest bounce from the 100-day Simple Moving Average (SMA) support, currently pegged near the 149.00 mark, warrants some caution before positioning for deeper losses. A convincing break below the said handle should pave the way for a slide towards the 50% retracement level, around the 148.20 region en route to the 148.00 mark. Some follow-through selling might expose the 61.8% Fibo. level, around the 147.00 round figure, with some intermediate support near the 147.35 area.

On the flip side, a further strength beyond the 150.00 psychological mark now seems to confront stiff resistance near the overnight swing high, around the 150.75 region, ahead of the 151.00 round figure. A sustained strength beyond the latter might trigger a short-covering rally and lift the USD/JPY pair to the 151.65 region en route to the 152.00 mark. The latter represents the very important 200-day Simple Moving Average (SMA) and should act as a key pivotal point, which if cleared decisively will suggest that the recent corrective pullback from a multi-month top has run its course. This, in turn, would shift the near-term bias back in favor of bullish traders.

US Dollar PRICE Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.16% 0.10% 0.38% 0.06% 0.10% 0.20% 0.28%
EUR -0.16%   -0.06% 0.22% -0.10% -0.06% 0.04% 0.12%
GBP -0.10% 0.06%   0.28% -0.05% -0.00% 0.10% 0.17%
JPY -0.38% -0.22% -0.28%   -0.32% -0.30% -0.21% -0.12%
CAD -0.06% 0.10% 0.05% 0.32%   0.04% 0.14% 0.22%
AUD -0.10% 0.06% 0.00% 0.30% -0.04%   0.10% 0.16%
NZD -0.20% -0.04% -0.10% 0.21% -0.14% -0.10%   0.07%
CHF -0.28% -0.12% -0.17% 0.12% -0.22% -0.16% -0.07%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

 

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