After profit-taking sales, the USD/JPY currency pair was exposed to it by the end of the week, because of which it reached the support level 141.50.
- The currency pair tried to rebound at the beginning of this week’s trading with gains to the resistance level 143.50.
- USD/JPY maintain the upward trend until a reaction from the markets.
- Investors are expected to announce US inflation figures, which will have an impact on expectations about the future of raising US interest rates.
Commenting on some Fed policy officials. “I support continued FOMC policy rate increases, and based on what I know today, I support a significant increase at our next meeting on September 20-21 to get the policy rate to a clearly limiting position,” Fed Governor Christopher Waller said on Friday. demand,” and “the consequences of being deceived by temporary inflation relief could be greater now if another miscalculation damages the Fed’s credibility.” Therefore, until I see a purposeful and sustained moderation of the rise in core prices, I will support taking other important steps in order to stress monetary policy.”
While references to former Fed Chairman Paul Volcker increased, another theme was strongly evident in the Fed's commentary as it was concerned about an upward drift in short-term inflation expectations, which could have implications for the long-term outlook in addition to actual inflation rates.
Policy Makers Hawkish
All of this is already enough to suggest that Fed policy makers may be more hawkish, not less, and that leaves more comfort whether Tuesday's US inflation data reveals a continued decline in US prices both on a monthly basis and on an annual basis.
The Japanese yen may be near 24-year lows, but the BoJ is nowhere near trying to support it with higher interest rates. That's the message from three sources familiar with the Bank of Japan's (BOJ) thinking, strongly indicated by the country's top foreign-exchange diplomat last week, and indeed by BoJ President Haruhiko Kuroda in July. For its part, the government - especially the Ministry of Finance - has repeatedly and strongly expressed its dissatisfaction with the decline in the yen this year, which fell on September 7 to 144,990 to the dollar, a decrease of 30 percent since the end of 2021. But the central bank is independent and is obligated by law to take into account inflation and the state of the economy Not the exchange rate.
Their support for a weak economy at very low interest rates is the main factor behind the weak yen, as other central banks, notably the US Federal Reserve, are tightening monetary policy rapidly, making their currencies more attractive as destinations for capital.
The sources said the BoJ has no intention of raising interest rates or adjusting its cautious policy guidance to support the yen. “The BOJ will not directly target currency rates in guiding policy,” one said. “It looks at the yen's movements in the context of how it affects the economy and prices.” “Current economic conditions do not justify a policy adjustment that is too loose,” that person said, expressing a view echoed by the other two sources.
The official data actually agree with that. The Bank of Japan joined the Ministry of Finance in warning of sharp declines in the currency. But Kuroda said in July, "It's hard to believe that once you raise interest rates somewhat, you can stop the yen's decline."
Forecast of the US dollar against the yen:
So far, the general trend of the USD/JPY currency pair is still bullish and will remain so unless it breaks below 140.00 in the near term, which in turn will increase the chances for the bears to turn further down. It may collapse more and quickly in the event of some intervention from Japan to stop the collapse of the Japanese yen from its lowest level in 24 years. According to the current upside trend, the closest targets will remain the resistance levels 144.00 and 145.50, respectively. It is sufficient to return the technical indicators towards overbought levels.
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