- USD/JPY is struggling to gain significant traction and is trading in a range on Friday.
- Speculations that the Japanese authorities could intervene in the markets limit the rise of the pair.
- The underlying bullish sentiment around the USD acts as a tailwind ahead of the US NFP report.
The pair USD/JPY It fails to capitalize on its gains posted in the last two days and is oscillating in a narrow range during the European session on Friday. The pair is currently trading around the psychological level of 145.00 and remains at the mercy of the price dynamics of the US dollar.
the growing acceptance that the Fed will maintain a more aggressive rate hike cycle to control inflation it continues to act as a tailwind for the dollar and the USD/JPY pair. Indeed, markets have been pricing in another 75 basis point Fed rate hike in November. These expectations were reinforced by recent hawkish comments from several Fed officials, who reiterated that the US central bank remains committed to controlling inflation.
Also, the widening of the rate differential between the US and Japan weighs on the Japanese yen and offers support to the USD/JPY pair. Prospects for faster Fed policy tightening continue to support elevated US Treasury yields. Instead, the Bank of Japan remains hell-bent on keeping JGB yields low. That said, fears of an intervention by the Japanese authorities are preventing bulls from opening new positions and capping gains from the majors.
Japanese Prime Minister Kishida referred to the weakness of the national currency and said that the recent sharp and unilateral movements of the yen are not desirable. Kishida added that last month’s intervention reflected the view that you can’t turn a blind eye to speculative currency moves. This comes after Japan’s Finance Minister Shunichi Suzuki said on Monday that the government is willing to intervene in the markets to prevent deeper losses in the yen.
Market participants also seem reluctant, preferring to stay on the sidelines ahead of the crucial monthly US employment data, due later in the American session. The popularly known NFP report will influence Fed rate hike expectations. This, in turn, will play a key role in determining the short-term trajectory for the dollar and provide a further directional boost to the USD/JPY pair. .
USD/JPY technical levels
Source: Fx Street
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