Created
: 2024.09.24
2024.09.24 12:18
The Japanese Yen (JPY) remains steady against the US Dollar (USD) on Tuesday. However, it faces downward pressure amid increasing concerns that the Bank of Japan (BoJ) is not hurrying to raise interest rates. Following the BoJ's policy decision on Friday, Governor Kazuo Ueda noted that although Japan's economy is experiencing moderate recovery, signs of underlying weakness persist.
Japan's Finance Minister Shunichi Suzuki stated on Tuesday that he is "monitoring the impacts of central banks' monetary policies." Suzuki expressed his expectation that the Bank of Japan will implement appropriate monetary policy measures while maintaining close coordination with the government.
The USD/JPY pair may weaken due to increasing expectations for further rate cuts by the US Federal Reserve (Fed) in 2024. According to the CME FedWatch Tool, markets are pricing in a 50% likelihood of a 75 basis point reduction, bringing the Fed's rate to a range of 4.0-4.25% by the end of this year.
USD/JPY trades around 143.70 on Tuesday. Daily chart analysis indicates that the pair is moving within a descending channel, signaling a bearish trend. Furthermore, the 14-day Relative Strength Index (RSI) is just below the 50 level, reinforcing the prevailing bearish sentiment.
On the downside, the USD/JPY pair may test the nine-day EMA at the 143.01 level. A break below this level could lead the pair to explore the 139.58 region, marking its lowest point since June 2023.
Alternatively, immediate resistance is identified at the upper boundary of the descending channel, around the 144.30 level. A breakout above this level could enable the USD/JPY pair to challenge the psychological barrier of 145.00.
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Euro.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 0.00% | -0.04% | -0.01% | -0.18% | -0.20% | -0.07% | -0.13% | |
EUR | -0.00% | -0.04% | -0.02% | -0.20% | -0.20% | -0.08% | -0.14% | |
GBP | 0.04% | 0.04% | 0.04% | -0.14% | -0.15% | -0.05% | -0.08% | |
JPY | 0.01% | 0.02% | -0.04% | -0.13% | -0.19% | -0.09% | -0.12% | |
CAD | 0.18% | 0.20% | 0.14% | 0.13% | -0.02% | 0.10% | 0.06% | |
AUD | 0.20% | 0.20% | 0.15% | 0.19% | 0.02% | 0.12% | 0.05% | |
NZD | 0.07% | 0.08% | 0.05% | 0.09% | -0.10% | -0.12% | -0.03% | |
CHF | 0.13% | 0.14% | 0.08% | 0.12% | -0.06% | -0.05% | 0.03% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
The Japanese Yen (JPY) is one of the world's most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan's policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan's mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ's stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen's value against other currencies seen as more risky to invest in.
Created
: 2024.09.24
Last updated
: 2024.09.24
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