JPY – With U.S. and Japanese interest rate meetings expected this week, the yen is likely to remain sideways

The yen saw little change last week. The U.S. and Japanese governments issued a joint statement on Friday, reiterating that exchange rates should be "market-determined" and that excessive and disorderly exchange rate fluctuations are undesirable. However, the yen fell at the start of the week after Japanese Prime Minister Shigeru Ishiba announced his resignation, ushering in a potentially prolonged period of policy uncertainty for Japan. As of Friday, the U.S. dollar stabilized against the Japanese yen. The joint statement, which emphasized that exchange rates should be market-determined and that excessive and disorderly exchange rate fluctuations are undesirable, boosted the dollar. However, data showing that U.S. consumer confidence declined for the second consecutive month in September put a slight drag on the dollar. The University of Michigan said on Friday that its consumer confidence index fell to 55.4 this month, the lowest since May, from a final reading of 58.2 in August. Economists polled by Reuters had expected a reading of 58.0, essentially unchanged from the previous month. Data released last Thursday showed the largest weekly increase in US initial jobless claims in four years. This data overshadowed August's consumer inflation data, which showed the fastest price increase in seven months, but the overall increase remained moderate and broadly in line with expectations. While mixed data could complicate the Federal Reserve's policy discussions this week, investors remain primarily focused on the prospect of a rate cut. According to the CME FedWatch tool, federal funds futures pricing indicates a consensus that the Fed will cut its key interest rate by 25 basis points on September 17.

The USD/JPY pair has been trading sideways in a tight range between 146.50 and 149 for over three weeks, with the RSI and Stochastics indicators also confined to a sideways pattern, yet to show a clear direction. USD/JPY remains in a volatile market. Nearest resistance is expected to be the 200-day moving average at 149; a break below this level could open the door to further gains. Subsequent resistance lies at 150 and the March 28 high of 151.22, with further support expected at 152. Support is currently seen at 147 and 146.50, followed by 145.50 and even the 145 level.

Estimated Range:
Resistance: 149.00 - 150.00 - 151.22 - 152.00
Support: 147.00 - 146.50 - 145.50 - 145.00

Focus:
Wednesday
Japan's August Imports, Exports, and Trade Balance (07:50)

Thursday
Japan's July Core Machinery Orders (07:50)

Friday
Japan's August National CPI (07:30)
Bank of Japan Interest Rate Decision (approximately 11:00)

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