The Japanese Yen (JPY) recovers following a modest Asian session slide as comments from Japan’s Finance Minister, Katsunobu Kato, fuel speculations that authorities could intervene to stem weakness in the domestic currency. Furthermore, the prospects for an imminent interest rate hike by the Bank of Japan (BoJ) this year turn out to be another factor lending support to the JPY. Any meaningful appreciation, however, still seems elusive amid expectations that domestic political chaos could delay the Bank of Japan’s (BoJ) rate hike plans.
Meanwhile, US President Donald Trump’s pivot on China tariffs remains supportive of the prevalent risk-on environment. This could further hold back the JPY bulls from placing aggressive bets, though the lack of follow-through US Dollar (USD) buying might cap the upside for the USD/JPY pair. Nevertheless, the mixed fundamental backdrop warrants some caution before positioning for a firm near-term direction for the USD/JPY pair. Traders now look forward to Federal Reserve (Fed) Chair Jerome Powell’s speech for a fresh impetus.
Japanese Yen gains positive traction as intervention fears offset political uncertainty
- Japan’s Finance Minister Katsunobu Kato said this Tuesday that he has recently seen one-sided and rapid moves in the foreign exchange, adding that it’s important for currencies to move in a stable manner, reflecting fundamentals. This provides a goodish lift to the Japanese Yen, though political uncertainty might cap gains.
- The long-standing Liberal Democratic Party (LDP)–Komeito coalition came to an abrupt end last week, as the newly elected LDP leader, Sanae Takaichi, awaits a parliamentary vote to confirm her as Japan’s first female Prime Minister. The breakup, in turn, means Takaichi would need support from other parties for her key policies.
- Nevertheless, the heightened political uncertainty might create a challenge for the Bank of Japan to hike interest rates further and continue to undermine the Japanese Yen. Furthermore, the optimism led by US President Donald Trump’s pivot on China tariffs turns out to be another factor driving flows away from the safe-haven JPY.
- In fact, Trump softened his stance after threatening additional tariffs of 100% on Chinese imports effective November 1 and posted on Truth Social that the US does not wish to hurt China. Trump added that both countries wish to avoid economic pain, easing concerns about a trade war between the world’s two largest economies.
- The US Dollar looks to build on the previous day’s positive move and remains within striking distance of its highest level since August touched last week, which further offers support to the USD/JPY pair. However, dovish Federal Reserve expectations might keep a lid on any further USD appreciation and cap the currency pair.
- According to the CME FedWatch tool, the possibility of a 25-basis-point interest rate cut by the Fed in October and December stands at around 97% and 90%, respectively. In contrast, traders are pricing in a greater chance that the BoJ would hike interest rates amid still sticky inflation and a still resilient economic performance.
- The US government shutdown is on track to extend into a third week amid deadlock on a funding plan. Republican Speaker Mike Johnson said that the shutdown could become the longest in history, warning that he won’t negotiate with Democrats until they pause their health care demands and reopen government.
- Important US macro releases have been delayed due to a prolonged US government shutdown, leaving the USD at the mercy of speeches from influential FOMC members. Hence, Tuesday’s key focus will be on Fed Chair Jerome Powell’s appearance, which could drive the USD and provide some impetus to the USD/JPY pair.
USD/JPY fails near the 100-hour SMA; could slide to 151.15 support zone
From a technical perspective, the USD/JPY pair has been struggling to move back above the 100-hour Simple Moving Average (SMA). However, positive oscillators on hourly/daily charts back the case for a further appreciating move. Some follow-through buying beyond the 152.70-152.75 hurdle will reaffirm the positive outlook and lift spot prices to the 153.00 mark en route to the eighth-month high, around the 153.25-153.30 region, touched last Friday.
On the flip side, weakness below the Asian session trough, around the 152.15 region, could find some support near the 152.00 mark ahead of the 151.75-151.70 region. Any further slide is more likely to attract some buyers near the 151.15 region (Friday’s swing low), which is closely followed by the 151.00 round figure. A convincing break below the latter could make the USD/JPY pair vulnerable to accelerate the fall below the 150.70 intermediate support, towards testing the 150.00 psychological mark. The latter also represents the 200-hour SMA and should act as a key pivotal point.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.05% | -0.23% | 0.05% | 0.60% | 0.41% | -0.12% | |
| EUR | 0.12% | 0.07% | -0.07% | 0.16% | 0.76% | 0.53% | 0.00% | |
| GBP | 0.05% | -0.07% | -0.16% | 0.11% | 0.69% | 0.51% | -0.07% | |
| JPY | 0.23% | 0.07% | 0.16% | 0.27% | 0.79% | 0.58% | 0.04% | |
| CAD | -0.05% | -0.16% | -0.11% | -0.27% | 0.59% | 0.36% | -0.18% | |
| AUD | -0.60% | -0.76% | -0.69% | -0.79% | -0.59% | -0.22% | -0.75% | |
| NZD | -0.41% | -0.53% | -0.51% | -0.58% | -0.36% | 0.22% | -0.53% | |
| CHF | 0.12% | -0.00% | 0.07% | -0.04% | 0.18% | 0.75% | 0.53% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Read the full article here
