USD/JPY tumbles to fresh multi-month lows in tandem with a slump in US bond yields
The USD weakens after the Fed opened doors for rate cuts by the end of 2019. Bearish traders further took cues from the ongoing slump in the US bond yields. BoJ’s decision to maintain status-quo fails to provide any respite for the bulls.
1. Technical Overview
Thursday's strong follow-through weakness could further be attributed to some aggressive technical selling below the 108.00 handle, marking a near-term bearish breakthrough over a one-week-old trading range. Hence, a subsequent downfall, further towards challenging the 107.00 handle, now looks a distinct possibility.
USD/JPY PRICE SENTIMENT
USD/JPY BULLISH PERCENTAGE INDEX
USD/JPY Pivot points
USD/JPY trading positions
2. Fundamental Overview
The USD selling pressure picked up the pace in the last hour, with the USD/JPY pair tumbling to fresh multi-month lows around mid-107.00s.
The pair remained under intense selling pressure on Thursday and added to the previous session's losses, led by dovish FOMC monetary policy statement. The US central bank left interest rates unchanged but signalled that it was ready to lower interest rates amid increasing uncertainties and receding inflationary pressure.
The US Dollar weakened across the board in reaction to dovish commentary and continued losing ground through the early part of Thursday's trading action. This coupled with the post-FOMC slump in the US Treasury bond yields to multi-year lows kept exerting some heavy downward pressure on the major.
The pair failed to gain any respite as bullish traders seemed rather unimpressed by the Bank of Japan (BoJ)'s decision to leave key policy tools unchanged and retained the short-term interest rate target at -0.1% while maintaining the 10-year Japanese government yield target around 0%.
USDJPY FUNDAMENTALS TODAY
3. Latest News & Analysis
THEMES AFFECTING THE USD/JPY
SPECIAL YEARLY USDJPY FORECAST
2018 saw contradicting forces eventually balancing each other and returning Dollar/Yen close to its starting line for the year. The robust US economy, Fed hawkishness, the detente around North Korea and rising bond yields supported the pair. Fears about international trade, a global downturn, Brexit, and hiccups in stock markets kept the pair depressed.
Influential Institutions & People for the USD/JPY
The US Dollar Japanese Yen can be seriously affected by news or the decisions taken by two main central banks:
The Bank of Japan is the central bank of Japan and it's a juridical person established based on the Bank of Japan Act, nor being a government agency either a private corporation. The most important missions of the BOJ are the following: to issue and manage banknotes, to implement monetary policy and to ensure stability of the financial system. Almost all of the decisions are taken by the Policy Board, formed by a bunch of members working to provide currency and monetary control and setting the next moves that the central bank will take.
On the other
Haruhiko Kuroda was nominated, by Prime Minister Shinzo Abe, as Governor of the Bank of Japan in March 2013. He had previously worked as President of the Asian Development Bank for 8 years. As the head of the BOJ, he has a major influence over the Japanese Yen. His words are usually followed by traders in order to find any clue of next possible trend in the currency.
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
BOJ NEWS & ANALYSIS
FED NEWS & ANALYSIS
The USD/JPY (or US Dollar Japanese Yen) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Japanese Yen has a low interest rate and is normally used in carry trades. This is the reason why is one of the most trades currencies worldwide. In this pair the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading this currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.
The EUR/USD (or Euro Dollar) currency pair is one of the 'Majors', or most important pairs in the world. This group also includes GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The Euro Dollar gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since this pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear.
Normally, the EUR/USD is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online.