The USD/JPY currency pair also jumped on signs that the Japanese government will intervene if the Japanese currency continues to fall.
The Japanese yen continued to fall even after the Bank of Japan showed signs of tightening. According to trading, USD/JPY jumped to a high of 145.06, its highest level since November last year, before settling around 144.66 on the US holiday at the time of writing, which may weigh on investors. taste and weaken liquidity, which ensures stability In narrow ranges for trading currency pairs. That’s up more than 13% this year in 2023, even as the U.S. dollar index (DXY) moves sideways.
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Overall, the Japanese economy is doing well. Its stock market has become one of the best performing in the world. Its main indexes, such as the Topix and Nikkei 225, jumped to their highest level in more than three decades as foreign investors piled in. Other data show that Japan’s economy is recovering. The latest data showed that Japan’s retail sales jumped 5.7% in May, after rising 5.15% in the previous month. It was the 15th consecutive month of growth in the retail sector as tourism boomed. Retail sales increased by 1.3% month-on-month.
Other data showed that the country’s household confidence improved to 36.2 from 36 earlier. This is an important number because consumer spending is an important part of the Japanese economy. There are signs that the Bank of Japan will begin to tighten in the near term. New Bank of Japan Governor Kazuo Ueda said in a statement to be announced soon that the bank could start normalizing policy in the near term if it is confident that inflation will pick up in 2024. Inflation remains below 2% but is on. rise.
The USD/JPY currency pair also jumped on signs that the Japanese government will intervene if the Japanese currency continues to fall. For his part, the finance minister said in a statement that the government is closely monitoring the currency. In another statement, Masanda Kato, the country’s currency diplomat, said the government was not ruling out intervention. Last year, the government sold more than $65 billion in foreign reserves as the US dollar to Japanese yen exchange rate jumped to the resistance level of 150. The weakness of the Japanese yen has hurt many Japanese companies that depend on imports.
- According to the performance on the daily chart below, the USD/JPY price is still in a strong bullish trend over the past few months.
- It started the year at 126 and has now risen to 145 resistance. Recently, the pair moved above the important resistance at 138, the high of March 7.
- It has crossed the 50 day mark moving average.
Meanwhile, oscillators like RSI, Stochastic Oscillator and MACD have moved to overbought levels. Therefore, there is a possibility that the pair will test again Support, support to 138.76 with high hopes for Japanese intervention in foreign exchange markets to stop further collapse of the Japanese Yen. The dollar/yen currency pair may move in narrow bands until markets and investors react to the announcement of the content of the minutes of the latest US central bank meeting and then the US jobs numbers.