- USD/JPY trades around an 11-month high on the back of robust growth in US Dollar (USD).
- Investors are pricing in the Fed’s hawkish stance on interest rates trajectory.
- 10-year US bond yield has risen to 4.56%, the highest level since October 2007.
- Japanese Finance Minister Shunichi Suzuki emphasized that the country has to choose between stimulating consumption or promoting wage growth.
USD/JPY trades near 148.90 close to an 11-month high during the Asian session on Tuesday. The US Dollar (USD) continues to strengthen, partly due to cautious market sentiment and higher US Treasury yields.
The US Dollar Index (DXY) trades higher above 106.00, marking its highest level since November. This strength in the US Dollar is supported by the upbeat US Treasury yields. The yield on the 10-year US bond note, which has risen to 4.56% by the press time, is a level not seen since October 2007.
The expectation of high-interest rates persisting for an extended period is driven by the resilience of the US economy. Moreover, the US Federal Reserve (Fed) signaled further interest rate hikes, if necessary, reinforcing the strengthening of the buck.
Additionally, there are concerns about the potential consequences of a federal government shutdown, as both US President Joe Biden and a senior adviser have warned about the widespread difficulties it could cause, including the loss of food benefits for nearly 7 million low-income women and children.
While there was a prior agreement between President Biden and House Speaker Kevin McCarthy on government spending levels, the Republican-controlled House of Representatives may seek to pass significant budget cuts, which would require approval by the Democratic-controlled Senate.
These proposed cuts would require approval by the Democratic-controlled Senate, which is expected to reject them. If both houses fail to reach an agreement on government spending, it could lead to a partial government shutdown by the following Sunday.
Investors will likely watch key data releases later in the week, including US Consumer Confidence, Durable Goods Orders, Initial Jobless Claims, and the Core Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve's preferred measure of inflation.
These datasets will provide important insights into inflationary pressures in the US economy and could influence trading decisions involving the US Dollar.
On the other side, the Japanese Yen (JPY) faces downward pressure after the Bank of Japan (BoJ) made no adjustment to its ultra-low monetary policy on Friday. BoJ has chosen to continue supporting the economy until inflation sustainably reaches its 2% target. This decision suggests that the central bank is in no hurry to phase out its massive stimulus program.
On Tuesday, Japanese Finance Minister Shunichi Suzuki commented on Japan's economic situation, emphasizing that the country is at a critical juncture where it needs to decide between stimulating consumption or promoting wage growth. Suzuki also noted that it is challenging to predict whether fiscal spending alone would lead to an increase in prices.
Moreover, Japan's newly appointed Economy Minister Yoshitaka Shindo has stated that it is crucial for currencies to exhibit stability in their movements, reflecting the underlying economic fundamentals.
On Monday, BoJ Governor Ueda highlighted the importance of taking more time to assess data before considering raising interest rates. Additionally, Deputy Governor Shinichi Uchida has emphasized the need for the central bank to continue monetary easing patiently and closely monitor currency market movements.
These dovish comments could undermine the Yen and may contribute to the support for the USD/JPY pair.
USD/JPY: additional important levels
|Today last price||148.9|
|Today Daily Change||0.02|
|Today Daily Change %||0.01|
|Today daily open||148.88|
|Previous Daily High||148.96|
|Previous Daily Low||148.25|
|Previous Weekly High||148.46|
|Previous Weekly Low||147.32|
|Previous Monthly High||147.38|
|Previous Monthly Low||141.51|
|Daily Fibonacci 38.2%||148.69|
|Daily Fibonacci 61.8%||148.52|
|Daily Pivot Point S1||148.43|
|Daily Pivot Point S2||147.98|
|Daily Pivot Point S3||147.72|
|Daily Pivot Point R1||149.14|
|Daily Pivot Point R2||149.41|
|Daily Pivot Point R3||149.86|
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.