USD/JPY Weakness Curbs Threat of Currency Intervention

Article By: ,  Strategist

US Dollar Outlook: USD/JPY

USD/JPY appears to be reversing ahead of the monthly high (153.86) as it falls toward the weekly low (153.28), with the recent weakness in the exchange rate keeping the Relative Strength Index (RSI) below 70.

USD/JPY Weakness Curbs Threat of Currency Intervention

The decline in USD/JPY may curb the threat of a currency intervention as the rally following the US election seems to be unraveling, and the exchange rate may continue to give back the advance from the monthly low (151.29) as Federal Reserve Governor Lisa Cook prepares US households and businesses for lower interest rates.

Join David Song for the Weekly Fundamental Market Outlook webinar.

 

In turn, the US Dollar may face headwinds ahead of the Fed’s last meeting for 2024 as the central bank insists that ‘in the near term, the election will have no effects on our policy decisions,’ and USD/JPY may struggle to retain the rally from the monthly low (151.29) if it fails to defend the weekly low (153.28).

With that said, USD/JPY may consolidate over the remainder of the month as the Fed moves toward a neutral stance, but the exchange rate may attempt to further retrace the decline from the yearly high (161.95) as the Bank of Japan (BoJ) shows little interest in pursuing a rate-hike cycle.

USD/JPY Price Chart – Daily

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

  • USD/JPY struggles to extend the advance from earlier this week amid the failed attempt to close above 156.50 (78.6% Fibonacci extension), with a close below 153.80 (23.6% Fibonacci retracement) raising the scope for a move towards 151.95 (2022 high).
  • 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 but the exchange rate may attempt to further retrace the decline from the yearly high (161.95) should it hold above the weekly low (153.28).
  • Need a close above 156.50 (78.6% Fibonacci extension) to bring the 1990 high (160.40) on the radar, with the next area of interest coming in around the July high (161.95).

Additional Market Outlooks

GBP/USD Struggles as BoE Bailey Sees Faster Disinflation

Gold Price Recovery Keeps RSI Above Oversold Zone

US Dollar Forecast: EUR/USD Rebound Pulls RSI Out of Oversold Zone

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

--- 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.

© City Index 2024