- Yen decline on Monday amid rising yields.
- Intervention: can it be maintained?
- USD/JPY with a very short-term bullish bias.
USD/JPY rises for the second day in a row on Monday and reaches a six-day high at 148.83, before pulling back to the 148.50 area. The yen is one of the worst performing stocks, even as US equity markets decline.
Rising US yields remain a key driver for USD/JPY. The US 10-year yield remains firm above 4.00%, while the 2-year yield is again approaching 4.50%.
Intraday, the pair moves with a bullish bias. The next resistance is seen around 149.10. On the other hand, the support levels are 148.25 and 147.80.
critical days ahead
Economic data released on Monday in the US showed an unexpected decline in the Chicago PMI and also in the Dallas Fed manufacturing business index. Despite the figures, the dollar remained in positive territory against most currencies. The ISM manufacturing index will be released on Tuesday.
On Wednesday, the FOMC will wrap up its two-day meeting. The Fed is expected to raise the key interest rate by 75 basis points. The report on non-farm payrolls will be published on Friday. These events are likely to keep volatility elevated over the coming sessions.
Data releases from Japan shed light on the authorities’ recent intervention to curb yen weakness. After spending some 20 billion dollars in September, the total in October exceeded 40 billion: “In total, these interventions represent almost 6% of their total foreign exchange reserves, so it is clear that this pace cannot be sustained Rather, we think the BOJ will continue to intervene sporadically and quietly to try to keep markets on their toes.With the BOJ doing another moderate maintenance last Friday, we think USD/JPY remains a buy at current,” said analysts at Brown Brother Harriman.
Technical levels
Source: Fx Street
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