- The yen is hovering near a one-year low on Monday of 151.92.
- Concerns about potential BOJ intervention could continue to hamper USD/JPY.
- The BOJ’s policy measures did not significantly sustain the yen’s rise.
As of Tuesday, the USD/JPI outlook signals a bullish trend, fueled by a battered yen, which is struggling near a three-decade low against the greenback. This weakness is mainly due to the easy monetary policy of the Bank of Japan (BOJ). This policy contrasts with the likelihood of prolonged higher rates elsewhere.
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Notably, the yen was at 151.70 against the dollar, hovering near Monday’s one-year low of 151.92. Meanwhile, the yen briefly rose against the dollar on Monday after hitting a year-to-date low. However, analysts attribute this to active trading in options expiring this week, rather than any intervention by Japanese authorities.
Additionally, options and concerns over a potential BOJ intervention could continue to hold back the USD/JPY pair.
In September last year, Japanese authorities intervened in the market for the first time since 1998. Consequently, the yen got a boost after falling due to the BOJ’s decision to maintain its ultra-loose monetary policy. Moreover, the BOJ intervened again in October 2022 when the yen hit a 32-year low of 151.94.
This year, the BOJ took gradual steps to phase out its controversial yield curve control (ICC) policy. Moreover, there were hints of an impending end to negative interest rates. However, these measures did not significantly sustain the yen’s growth. This is especially true as central banks around the world are taking a hawkish stance with the expectation of holding out for higher rates.
USD/JPI Key Events Today
Investors are eagerly awaiting the US inflation report, which will include the following components:
- Core CPI (month) (October)
- CPI (month) (October)
- CPI (y/y) (October)
USD/JPI Technical Outlook: Price poised for potential retest of 30-SMA.
On the technical side, the price of USD/JPI is bullish and trading above the key level of 151.51. Supporting the bullish bias is the fact that the price is above the 30-SMA and the RSI is above 50. However, the bears have shown some strength with a strong bearish candle.
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The price briefly dipped below 151.51 before pulling back. If the bears get stronger, the price could soon retest the 30-SMA support. However, given the bullish bias, it is likely to bounce higher to clear the 152.01 resistance level.
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