- The Japanese yen witnessed further weakness against its counterpart, the US dollar, falling to its lowest level in over three decades.
- According to forex trading platforms, the Japanese yen has faced immense pressure this year, even as the Bank of Japan raised interest rates for the first time since 2007 and economic outlook improved.
- Technically, the USD/JPY exchange rate breached the psychological resistance level of 155.00, reaching gains up to 155.37 before settling around 155.20 at the time of analysis ahead of important US data announcements.
Commenting on the performance of currency rates, former US President Donald Trump described the rise in the price of the US dollar as a “complete disaster” for the US economy, arguing that it affects US manufacturing companies and other companies participating in the global market through the export of goods and services. For his part, the presumptive Republican nominee wrote on the Truth Social website: “It sounds good for the idiots, but it is a disaster for our manufacturers and others.” Added, “They are actually unable to compete and will either have to lose a lot of business, or build factories, or something.” Another, in “smart” countries. Obviously, this is what made Japan and China giants years ago.
In general, a lower-valued currency, such as the Japanese yen, benefits companies that export products and tourists who visit Japan. However, this is a terrible development for businesses and households because import costs are higher. US officials have ostensibly given the green light for Japan to intervene in global forex markets and support the yen. In this regard, US Treasury Secretary Janet Yellen said in a statement: “We will also continue to consult closely on foreign exchange market developments in line with our existing G20 commitments, while recognizing the serious concerns of Japan and the Republic of Korea regarding the recent sharp decline in the value of the Japanese yen and the Korean won.”
Meanwhile, Japanese officials have indicated they plan to act, the government and central bank have not specified what measures they could take.
In terms of economic data, according to the results of the economic calendar data, manufacturing in Japan improved in April, with the Jibun Bank Manufacturing Purchasing Managers' Index rising to 49.9, up from 48.2 in March and higher than the consensus estimates of 48. Any reading below 50 indicates contraction. Also, services and the composite Purchasing Managers' Index improved this month, rising to 54.6 and 52.6, respectively.
USD/JPY Technical analysis and Expectations Today:
The general trend of the price of the US dollar against the Japanese yen (USD/JPY) is still bullish, and its successive record gains have moved all the technical indicators towards strong overbought levels. Currently, we still prefer selling the dollar against the Japanese yen from its gains above the 155.00 resistance, but without risk, considering that Japanese intervention in the markets It is very imminent and may happen at any moment, and therefore the currency pair may be exposed to strong selling operations to take profits, with the trend quickly turning to the downside. Also, the USD/JPY currency pair will be affected by the announcement of the US economic growth reading and then the US inflation reading, which is preferred by the US Federal Reserve.
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