Created on November 21, 2024

• The Japanese yen’s gains continued to weaken on Tuesday as uncertainty surrounding the future of the Bank of Japan’s policy pushed the USD/JPY pair down to 153.28.
• However, it quickly reversed to an upward trend, with gains extending to the resistance level of 155.88.
• The USD/JPY pair is currently stabilizing around the 155.40 level at the time of writing this analysis, ahead of the announcement of important US data, led by the announcement of weekly jobless claims and statements by some US Federal Reserve officials.

BoJ Policies

In addition to the strength of the US dollar since Trump’s victory, investors are also reacting to expectations about the future of the Bank of Japan’s policies. Recently, uncertainty has persisted regarding future Japanese interest rate hikes. In this regard, the Governor of the Bank of Japan confirmed that any interest rate hikes would be gradual, depending on economic conditions, and at the same time did not indicate a timeline for when such increases in rates would occur.

Exchange Rate and Japanese Intervention

The continued rise of the US dollar against the Japanese yen has often prompted statements from Japanese officials about the harm of continued increases. Recently, the latest verbal warnings from Japanese authorities have been less effective in curbing market concerns, as traders are looking at the 160 level for the US dollar against the Japanese yen as a potential trigger for further government intervention in the forex market. In general, the Japanese yen remains under pressure from the US dollar, supported by expectations that Trump’s policies may reignite inflation and limit future interest rate cuts by the Federal Reserve.

Japanese stocks in decline

According to stock trading platforms, the Nikkei 225 Japanese stock index fell by 0.8% to around 38030, while the broader TOPIX index lost 0.2% to 2693 on Thursday, as Japanese stocks reached their lowest levels in several weeks, and Japanese stocks were negatively affected by losses in the technology sector. The decline came after a sharp drop in the US-based Nvidia stock after hours, despite the company announcing better-than-expected quarterly results and providing strong forward guidance. Overall, the suffering of Nvidia shares has greatly affected the broader technology sector.

USD/JPY Technical analysis and Expectations Today:

The overall trend of the USD/JPY pair remains upward. Bulls are in control as long as the currency pair is above the resistance of 155.00. The performance of the USD/JPY pair is currently focusing on the possibility of intervention from Japan. Talk of this will increase within the resistance ranges of 155.00 and 160.00, respectively. The upward movement amidst a strong rebound from the 21-day simple moving average. So far, Japanese intervention in the foreign exchange markets has been verbal. Therefore, you should be cautious as actual Japanese intervention in the market may bring about strong selling of the currency pair. Meanwhile, the first move will be from the support of 152.00 and below.

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