- For the third consecutive day, the price of the USD/JPY currency pair has rebounded higher, recovering around the resistance level of 150.72, after strong selling pressure that it was exposed to following the negative US job numbers, with losses reaching the support level of 149.19.
- As we mentioned before, the currency pair will remain in a buying position from every downside level, as the divergence is still clear and widening between the hawkish Federal Reserve and the Bank of Japan with its negative interest rate.
Waiting for Powell's Statement
During yesterday's trading, US stock indices rose as Wall Street markets continued to absorb the large fluctuations that shook the financial markets recently. According to trading, the Standard & Poor's 500 index rose by 0.2% and is heading for a quiet second day after months of heavy losses that turned sharply into a rise last week, which is the best during the year. Nearby, the Dow Jones Industrial Average rose 34 points, and the Nasdaq Composite rose 0.8%.
Overall, most major companies have beat estimates so far this earnings reporting season, but there is another factor that has been more influential in driving the huge volatility in the stock market since the summer: the bond market. Treasury yields fell on Tuesday, with the yield on the 10-year note rising to 4.60% from 4.66% late Monday.
But yields fell sharply last week after investors received comments from the Federal Reserve indicating that it may finally be done raising interest rates. Inflation has been moderating since peaking in the summer of 2022, and the recent jump in Treasury yields may serve as an alternative to further interest rate hikes. Of course, US Federal Reserve Chairman Jerome Powell also warned last week that further rises could occur if the rise in Treasury yields does not remain “sustained.” Another Fed official, Neel Kashkari of the Federal Reserve Bank of Minneapolis, told Fox News late Monday that he was "a little nervous about declaring victory so early." He said he wants to see more data showing that inflation is calming.
Overall, speeches from other Fed officials this week could be the biggest mover for financial markets, with relatively few high-impact economic reports on the calendar. Depending on what Fed officials say, this could herald a quieter week for financial markets, which have had quick catalysts.
USD/JPY Trading Outlook
According to the performance on the daily chart below, the price of the US dollar against the Japanese yen (USD/JPY) is stable, above the psychological resistance of 150.00. Meanwhile, it will continue to support more bulls’ control over the trend, and at the same time prepare for upward breakthroughs that may reach the resistance levels of 151.20 and 152.00, respectively. Furthermore, considering that the exchange rate is monitored by officials in Japan, and they are ready to intervene in the markets at any time to stop the further collapse of the yen price, which may harm the Japanese economy. Moreover, buy with caution, especially above the psychological resistance of 150.00.
Therefore, the gains of the dollar/yen are due today with new statements by US Federal Reserve Governor Jerome Powell. Shortly, any hints of further tightening the bank's policy will push the dollar to achieve stronger gains against the rest of the other major currencies.
Ready to trade our Forex daily analysis and predictions? Here's a list of regulated forex brokers to choose from.