The US dollar continues to see a lot of pressure against the Japanese yen, mainly in the context of a potential shift in Japanese interest rate policy. That being said, the interest rate differential continues to be in favor of the USA.
USD/JPY
The U.S. dollar has fallen a bit during the trading session here on Friday as we continue to see traders really run from the carry trade. This is a huge story in the forex markets at the moment, and will continue to grab a lot of headlines, with both central banks on tap for decisions this upcoming week.
Top Regulated Brokers
The question at this point in time is whether or not that continues to be the case, or if we see some type of turnaround. We have the Federal Reserve interest rate hike coming out on Wednesday. The question will be, what’s the commentary like? Furthermore, we have the Bank of Japan, which could be raising rates Thursday of next week, but then what’s their forward guidance? We’ll have to wait and see who blinks, but if the Japanese do — and they will have to eventually — that sends this market back around.
This is a market that I think is trying to find its bottom.
It looks like so far it may have, at least in the short term. The question is, can we break back above the ¥155 level? If we can clear the ¥155 level, then it opens up the possibility of a move to ¥156.50, ¥157 possibly.
It will be a long slog higher, but the interest rate differential continues to favor the U.S. dollar, and if both central banks do that, then it becomes about expectations. We had broken below a significant uptrend line, but now it looks like we are at least trying to see some type of stabilization.
Want to trade our USD/JPY forex analysis and predictions? Here's a list of forex brokers in Japan to check out.