USD/JPY, contained above 113.00, bounces up to 113.50 area
|- The dollar remains near three-year highs at 113.80, supported above 113.00.
- The Japanese yen edges up after a four-day downtrend.
- USD/JPY's rally is heading to 120.00 – ING.
The US dollar is regaining some ground against the Japanese yen on Wednesday’s US trading session. The pair’s reversal from three-year highs at 113.80 has found support at 113.25, before ticking up to 113.45.
The yen edges up against a softer US dollar
The Japanese yen appreciated earlier on Wednesday, supported by a somewhat weaker dollar, on the back of a flattening US yield curve. The 10-year bond yield has dropped to 1.57% after having peaked at 1.61 on Tuesday, while the 2-year yield has surged to 18-month highs at 0.36%
Furthermore, the US macroeconomic calendar has confirmed the inflationary pressures threatening economic recovery. US consumer prices accelerated at a 0.4% monthly pace and 5.4% year-on-year in September, from 0.3% and 5.3% respectively in September.
These figures bring into question Fed Powell’s theory of a “transitory” high inflation and bolster expectations the Federal Reserve may announce the rolling back of its massive monetary stimulus program in November.
USD/JPY: Seen rallying towards 120.00 – ING
According to the FX Analysis team at ING, however, USD’s rally is far from being finished. They expect the pair to reach prices at 120.00: “Pressure is building for a topside break out in USD/JPY. We think the US macro/Fed story will be a positive one for the dollar over the next 15 months (USD/JPY to trade to 120), while home-grown developments look slightly JPY bearish.”
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.