USD/JPY Rebounds as BoJ Ueda Pledges to Support Economic Activity

Japanese Yen Outlook: USD/JPY

USD/JPY continues to defend the rally following the US election as it attempts to retrace the decline from the monthly high (156.75), and the exchange rate may further retrace the decline from the yearly high (161.95) as Bank of Japan (BoJ) Governor Kazuo Ueda insists that ‘monetary policy will continue to firmly support economic activity.’

USD/JPY Rebounds as BoJ Ueda Pledges to Support Economic Activity

The Japanese Yen is under pressure as BoJ Governor Ueda states that ‘gradually adjusting the degree of accommodation in line with improvement in economic activity and prices will support long-term economic growth and contribute to achieving the price stability target in a sustainable and stable manner’ while speaking in Nagoya.

Governor Ueda goes onto say that ‘the actual timing of the adjustments will continue to depend on developments in economic activity and prices as well as financial conditions,’ and it seems as though the BoJ has little intentions of pursuing a rate-hike cycle as the central bank pledges to ‘pay due attention to various risk factors, such as those pointed out in the latest Outlook Report, including the course of overseas economies, particularly the U.S. economy, and developments in financial and capital markets.’

In turn, the Japanese Yen may face headwinds over the remainder of the year as the BoJ looks poised to keep interest rates on hold at its last meeting for 2024, and developments coming out of the US may sway USD/JPY over the coming days as Federal Reserve Chairman Jerome Powell warns that ‘the economy is not sending any signals that we need to be in a hurry to lower rates.’

With that said, USD/JPY may track the recent rise in long-term US Treasury yields as it attempts to retrace the decline from monthly high (156.75), but the Relative Strength Index (RSI) may show the bullish momentum abating should it continue to hold below overbought territory.

USD/JPY Price Chart – Daily

Chart Prepared by David Song, Strategist; USD/JPY on TradingView

USD/JPY may retrace the decline from last week as it holds above 153.80 (23.6% Fibonacci retracement), with a breach above 156.50 (78.6% Fibonacci extension) raising the scope for a test of the monthly high (156.75).
A breach above the 1990 high (160.40) opens up the yearly high (161.95) but lack of momentum to hold above 153.80 (23.6% Fibonacci retracement) would bring the 2022 high (151.95) back on the radar.
Failure to defend the monthly low (151.29) may push USD/JPY back towards the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone, with the next area of interest coming in around 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension).

Additional Market Outlooks

Canadian Dollar Forecast: USD/CAD Rally Clears 2022 High

US Dollar Forecast: AUD/USD Halts Bearish Price Series

GBP/USD Trades Below 200-Day SMA for First Time Since May

EUR/USD Eyes 2023 Low as RSI Flirts with Oversold Zone

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.