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USD/JPY Analysis: All Eyes on Japan

  • The yen has fallen to around 161.75 per dollar, just below its 38-year low, as the dollar strengthens.
  • Obviously, this comes after Fed Chair Jerome Powell reiterated the central bank's cautious approach to rate cuts.
  • Powell said they need more data to gain confidence that inflation is moving sustainably towards 2%, although he warned that the economy and Labor market are showing signs of slowing.

USD/JPY Analysis Today - 11/07: All Eyes on Japan (Chart)

According to reliable trading platforms, the Japanese yen also weakened in the run-up to the Bank of Japan’s monetary policy meeting in July, despite expectations that it could raise interest rates again and announce plans to reduce bond purchases this month. The central bank is under pressure to normalize monetary conditions more aggressively, as a weaker yen is pushing up import costs, raising inflationary risks.

On the economic data front, Japan’s corporate goods price index rose 2.9% year-on-year in June, the highest reading since August last year.

On the stock trading front, Japan’s Nikkei index hits new record high. According to trading, Japan’s Nikkei 225 index rose 0.61% to close at 41,832 on Wednesday, hitting a new all-time high as AI-related stocks and a weaker yen continued to push Japanese markets higher. Also, the broader TOPIX index rose 0.47% to 2,909, a 34-year high.

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    Likewise, Japanese stocks followed Wall Street gains after Federal Reserve Chairman Jerome Powell warned that keeping policy tightening for too long could hamper economic growth. Meanwhile, economic data showed that Japan’s corporate goods price index rose 2.9% year-on-year in June, the highest reading since August last year. Moreover, the index heavyweights saw notable gains such as Disco Corp (2.5%), Mitsubishi UFJ (1.5%), Sony Group (1.6%), Tokyo Electron (1.1%) and Fast Retailing (1.4%). In corporate news, Recruit Holdings jumped 3.6% after revealing that it will buy back up to 5.7% of its outstanding shares over the course of one year.

    USD/JPY Technical analysis and Expectations Today

    As we expected before, the general trend of the USD/JPY will remain bullish until a Japanese intervention in the forex markets stops the collapse of the yen exchange rate. Otherwise, the general trend of the USD/JPY will remain bullish and break record levels as the divergence between the US Federal Reserve’s policy. Clearly, this will be affected by the announcement of US inflation figures today, and the Bank of Japan’s policy remains clear and ongoing. Currently, the closest resistance levels for the currency pair are 161.85, 162.30 and 163.00 respectively.

    Want to trade our USD/JPY analysis and predictions? Here's a list of forex brokers in Japan to check out. 

    Mahmoud Abdallah
    About Mahmoud Abdallah
    Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.
     

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