21 October 2024, USD/JPY
USDJPY:
The Japanese Yen (JPY) begins the new week on a modestly positive note against its US counterpart, with indications that it may build on Friday's recovery from its lowest level since early August. The JPY is receiving some support from recent verbal intervention from Japanese authorities. However, uncertainty over the timing and pace of further interest rate hikes by the Bank of Japan (BoJ) should limit any significant appreciation.
On Friday, BoJ Governor Kazuo Ueda cautioned that the outlook for Japan's economic recovery remains uncertain and underscored the importance of monitoring the impact of market volatility on the economy. This follows Japanese Prime Minister Shigeru Ishiba's unexpected remarks opposing further interest rate increases, indicating that the Bank of Japan will not hasten the implementation of additional policy measures in advance of Japan's general election on 27 October.
This, along with the prevailing risk sentiment, should provide support for the safe-haven yen. Meanwhile, expectations that the Federal Reserve (Fed) will continue to moderate interest rate cuts next year are keeping US Treasury yields high and limiting the US dollar's corrective fall from a two-month high. This could have the effect of further undermining the low-yielding Japanese Yen and supporting the prospects of dip-buying in USD/JPY.
Trade recommendation: Trading predominantly Sell orders from the current price level.
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