Japanese Yen advances to one-week high as sliding US bond yields weigh on USD
- USD/JPY drifts lower during the Asian session amid a combination of negative factors.
- Intervention risks support the JPY, while retreating US bond yields undermine the USD.
- Traders eye the US PPI for some impetus ahead of Fed Chair Warsh’s speech on Friday.
The USD/JPY pair extends the previous day's rejection slide from the 159.00 neighborhood, or a three-week top, attracting some follow-through selling during the Asian session on Thursday. The downward trajectory drags spot prices to a one-week low, around the 157.60 area, in the last hour, and is sponsored by a combination of factors.
Traders remain on high alert amid speculation that Japanese authorities will step in again to prop up the domestic currency. Adding to this, the Bank of Japan's (BoJ) hawkish outlook offers some support to the Japanese Yen (JPY), which, along with a broadly weaker US Dollar (USD), exerts some downward pressure on the USD/JPY pair.
The BoJ maintained a gradual tightening stance after raising its policy rate to a 31-year high of 1.25% in September. However, reports indicate that BoJ officials are inclined to skip a back-to-back hike at the October meeting, citing the need to evaluate the cumulative impact of past rate increases, lackluster consumption, and subdued services inflation.
Meanwhile, the initial reaction to the hotter-than-expected US Consumer Price Index (CPI) report released on Wednesday turned out to be short-lived amid expectations that the Federal Reserve (Fed) will skip an October rate increase. This led to a further slide in US bond yields, which prompted USD profit-taking and weighed on the USD/JPY pair.
Nevertheless, traders are still pricing in over an 85% chance that the US central bank will raise borrowing costs by the end of this year. Adding to this, inflation risks stemming from volatile energy prices underpin prospects for further tightening. This, along with geopolitical uncertainties, could limit USD losses and lend some support to the USD/JPY pair.
Traders now look forward to the release of the US Producer Price Index (PPI), due later today. Apart from this, Fed Chair Kevin Warsh's speech on Friday will be looked upon for more cues about the future policy path, which will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the USD/JPY pair.
USD/JPY 4-hour chart
Technical Analysis
The USD/JPY pair break the 100-period Simple Moving Average (SMA) pivotal support on the 4-hour chart, with bears now awaiting acceptance below the 23.6% Fibonacci retracement level before placing fresh bets. The subsequent fall could extend to the 38.2% level at 156.71. Deeper pullbacks would expose the 50.0% retracement at 155.98 and the 61.8% level at 155.25, while the 78.6% retracement at 154.21 and the 152.88 100.0% level mark more distant structural floors. On the topside, resistance is defined first by the 100-period SMA at 157.97, with the 159.07 swing high acting as a stronger barrier if bulls regain control.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.48% | -0.32% | -0.39% | -0.22% | 0.30% | -0.27% | -0.65% | |
| EUR | 0.48% | 0.15% | 0.05% | 0.27% | 0.81% | 0.20% | -0.18% | |
| GBP | 0.32% | -0.15% | -0.08% | 0.09% | 0.63% | 0.05% | -0.34% | |
| JPY | 0.39% | -0.05% | 0.08% | 0.18% | 0.74% | 0.12% | -0.25% | |
| CAD | 0.22% | -0.27% | -0.09% | -0.18% | 0.53% | -0.04% | -0.43% | |
| AUD | -0.30% | -0.81% | -0.63% | -0.74% | -0.53% | -0.58% | -0.97% | |
| NZD | 0.27% | -0.20% | -0.05% | -0.12% | 0.04% | 0.58% | -0.39% | |
| CHF | 0.65% | 0.18% | 0.34% | 0.25% | 0.43% | 0.97% | 0.39% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).