USDJPY extended its gains on Friday, going at 146.68 after rising by 0.1 percent. The Bank of Japan (BoJ) was initially expected to raise interest rates by 10 basis points in the next two months, but that prospect now seems farfetched. Newly-sworn-in Japanese Prime Minister, Shigeru Ishiba, said on Wednesday that this wasn’t the best time to hike rates, sentiments supported by Economy Minister Ryosei Akazawa. That adds pressure to the yen but some of that could be offset by the dollar’s own pressure from a potential rate cut by the Fed.
US Initial Jobs Claims rose more than expected to 225k, beating the forecast estimate of 222k for the week ending September 26. Meanwhile, the previous week’s figures were revised upward by 1k to 219k. That has added to concerns over the US labour market, which could necessitate another interest rate cut in November.
The US dollar‘s has a safe haven advantage over the Japanese yen amid the rising hostilities in the Middle East will provide it with some propulsion. However, the S&P Globals Services PMI came in lower than expected in September, with the reading at 55.4 versus the forecast 55.2. That adds to concerns that the US economy could be in a slowdown, and that the Federal Reserve might have to add to the 50 bps cut announced on September 18.
The USDJPY pair pivots at 146.45, and the upside will likely continue if the action stays above that level. With the buyers in control, the next barrier will likely come at 146.77, but a stronger momentum could break above that level to test 147.23.
Conversely, a move below 146.45 will signal bearish control. If that happens, the first support could come at 146.18. However, if the bearish momentum strengthens, USDJPY could break below that mark and invalidate the upside narrative. That could result in further losses to test 145.73.
This post was last modified on Oct 03, 2024, 19:24 BST 19:24