- USD/JPY is down almost 2% from Monday’s opening bids.
- A pivot from the Fed saw the US Dollar decline sharply across the broader forex market.
- Next week pits the BoJ’s last rate call of the year against US GDP & PCE figures.
The USD/JPY wrapped up the trading week struggling to develop momentum in either direction from the 142.00 handle after the US Dollar (USD) slumped against the Japanese Yen (JPY) following a mid-week pivot from the US Federal Reserve (Fed), with the central bank finally meeting market participants in the middle on rate cut expectations heading into 2024.
The Fed’s dot plot of policymakers’ cumulative interest rate expectations next year sees the Fed expecting a median of three rate cuts for a total of 75 basis points in rate cuts from the Fed’s current reference rate of 5.5%. While the Fed has moved closer to market expectations, money markets have run well ahead of the Fed’s policy stance, with swaps markets pricing in an eye-watering six rate cuts in 2024, for a combined cut forecast over 150 basis points.
Forex Today: Dollar tumbles on Fed's pivot despite US economy still outperforming
The Fed’s pivot on rate policy sparked a risk rally that pushed the USD into the floorboards to end the week as the single-worst performing currency of the fx majors bloc, shedding weight across the board and finishing the week nearly two percent off of Monday’s opening bids against the Japanese Yen.
Next week kicks things off for the USD/JPY with the Bank of Japan’s (BoJ) final rate call and Monetary Policy Statement for 2023. An exact start time to the elusive BoJ’s rate statement is difficult to nail down, but the Japanese central bank is broadly expected to hold its main reference rate slightly below zero, in negative territory at -0.1%.
Next week also sees a fresh reading of the US’ Gross Domestic Product (GDP) on Thursday, and investors will be keeping a close eye on next Friday’s Personal Consumption Expenditure (PCE) figures. As the Fed’s favored method of tracking consumer-facing inflation, the PCE will go a long way to markets adjusting their rate expectations heading into 2024.
US Dollar price this week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -1.22% | -1.00% | -1.54% | -1.84% | -1.92% | -1.41% | -1.07% | |
| EUR | 1.19% | 0.21% | -0.32% | -0.63% | -0.72% | -0.19% | 0.14% | |
| GBP | 1.00% | -0.22% | -0.53% | -0.83% | -0.92% | -0.40% | -0.07% | |
| CAD | 1.52% | 0.33% | 0.52% | -0.31% | -0.39% | 0.13% | 0.46% | |
| AUD | 1.82% | 0.62% | 0.83% | 0.31% | -0.09% | 0.44% | 0.77% | |
| JPY | 1.90% | 0.70% | 0.84% | 0.39% | 0.09% | 0.52% | 0.85% | |
| NZD | 1.39% | 0.18% | 0.40% | -0.13% | -0.43% | -0.52% | 0.33% | |
| CHF | 1.06% | -0.15% | 0.06% | -0.46% | -0.75% | -0.82% | -0.33% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
USD/JPY Technical Outlook
The USD/JPY saw a hard rebalance on Wednesday, dragging the pair back down to the 141.00 handle before the Dollar leveled out to end the trading week just above the 142.00 price point.
The pair saw a peak-to-trough decline of 3.85% on the week, and the Dollar’s decline and minuscule rebound sees the USD/JPY trading far below the 200-hour Simple Moving Average (SMA) descending through the 145.00 major handle.
The USD/JPY’s declines have dragged the pair back into the 200-day SMA for the first time since breaking through the moving average back in May of this year, and the pair is down over seven percent from the year’s peak bids at 151.83 back in November.
Despite this, Greenback bidders will be able to walk away happy: the USD is still up nearly 8% against the JPY for 2023, having started the year near the 131.00 handle.
USD/JPY Hourly Chart
USD/JPY Daily Chart
USD/JPY Technical Levels
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD weakens further as US Treasury yields boost US Dollar
The Australian Dollar extended its losses against the US Dollar for the second straight day, as higher US Treasury bond yields underpinned the Greenback. On Wednesday, the AUD/USD lost 0.26% as market participants turned risk-averse. As the Asian session begins, the pair trades around 0.6577.
EUR/USD stuck near midrange ahead of thin Thursday session
EUR/USD is reverting to the near-term mean, stuck near 1.0750 and stuck firmly in the week’s opening trading range. Markets will be on the lookout for speeches from ECB policymakers, but officials are broadly expected to avoid rocking the boat amidst holiday-constrained market flows.
Gold price drops amid higher US yields awaiting next week's US inflation
Gold remained at familiar levels on Wednesday, trading near $2,312 amid rising US Treasury yields and a strong US dollar. Traders await unemployment claims on Thursday, followed by Friday's University of Michigan Consumer Sentiment survey.
President Biden threatens crypto with possible veto of Bitcoin custody among trusted custodians
Joe Biden could veto legislation that would allow regulated financial institutions to custody Bitcoin and crypto. Biden administration’s stance would disrupt US SEC’s work to protect crypto market investors and efforts to safeguard broader financial system.
Navigating the future of precious metals
In a recent episode of the Vancouver Resource Investment Conference podcast, hosted by Jesse Day, guests Stefan Gleason and JP Cortez shared their expert analysis on the dynamics of the gold and silver markets and discussed legislative efforts to promote these metals as sound money in the United States.