- The Japanese yen has declined to the brink of 150 yen per US dollar, heading towards its lowest levels since early August.
- This is due to the strengthening of the US dollar amid strong expectations that the Federal Reserve will not provide further significant cuts in US interest rates in its remaining meetings this year.
- The Japanese yen also followed the weakness of the Chinese yuan after China's stimulus plan announced over the weekend failed to inspire market confidence by leaving investors uncertain about the size of the package.
In Japan, Prime Minister Shigeru Ishiba said earlier this month that current economic conditions may not warrant additional interest rate hikes. However, other senior Japanese officials later softened the prime minister’s comments, with Chief Cabinet Secretary Yoshimasa Hayashi saying that Ishiba did not make any specific request to Bank of Japan Governor Kazuo Ueda during their meeting.
According to stock trading platforms, the Nikkei index in Japan jumped to its highest level in 12 weeks.
The Nikkei 225 Japanese stock index rose 1% to around 40,000 points in post-holiday trading on Tuesday, hitting its highest level in 12 weeks, drawing strength from a strong advance in US stock markets on Wall Street overnight as the Dow Jones and S&P 500 reached new record highs. Also, the broader TOPIX index rose 0.8% to 2728, its highest level in a week.
The weakness of the Japanese yen also boosted domestic stocks, as senior Japanese officials called for caution before raising interest rates further, while the US Federal Reserve is expected to adopt a more modest approach to cutting interest rates. According to the trades, technology stocks led the charge, with strong gains in shares of SoftBank Group (5.8%), Lazertec (3.2%), Disco (1.8%), Tokyo Electron (3.2%), and Advantest (2.9%). Heavyweight financial stocks also advanced, including shares of Mitsubishi UFJ (1.8%), Sumitomo Mitsui (2.4%), and Mizuho Financial (2.6%).
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USD/JPY Technical Analysis and Expectations Today:
Based on the performance on the daily chart below, the USD/JPY price is still on an upward trajectory and as I mentioned before, a move above the psychological resistance of 150.00 will be important for bulls to control the trend. Technically, the next most important peak for the rise will be 152.30. On the other hand, and in the same time frame, a move below the 145.90 level will be important for bears to regain control. Ultimately, the USD/JPY rate will remain subject to signals from global central bankers and investors' risk appetite.
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