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Another opportunity for currency intervention by the Bank of Japan

Another opportunity for currency intervention by the Bank of Japan | 03 July 2024

03 July 2024, USD/JPY

Another opportunity for currency intervention by the Bank of Japan

Event to watch out for today:

15:30 GMT+3. USD - Number of initial claims for unemployment benefits

17:00 GMT+3. USD - ISM Service Sector Activity Index

21:00 GMT+3. USD - Federal Reserve Meeting Minutes

USDJPY:

The Japanese Yen (JPY) continues to suffer losses on Wednesday, remaining near a low of 161.75, a level not seen since 1986, recorded in the previous session. The decline may be attributed to final data indicating that business activity in Japan began to contract in June. Market participants are focused on the possibility of currency intervention by the Bank of Japan (BoJ), which could support the Japanese Yen and limit the growth of the USD/JPY pair.

Japan's 10-year government bond yield rose to a near 13-year high of 1.11%. Traders continue to assess the outlook for the Bank of Japan's monetary policy amid a sharp depreciation of the Japanese yen, which raises the cost of imports and contributes to inflationary pressures. In addition, the central bank announced plans to unveil a strategy to wind down its bond buying program in July.

The US dollar (USD) halted its four-day losing streak thanks to a rebound in the 2-year Treasury bond yield, which is at 4.75% at the time of writing. Traders await the release of the ADP US employment change data, ISM Services PMI for June and the FOMC meeting minutes scheduled for Wednesday.

Trading recommendation: Watch the level of 161.75, and if the level is fixed above, take Buy positions. On the rebound take Sell positions.

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David Johnson
Analyst of «FreshForex» company
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