The Yen Makes up More Ground Against the Dollar
The Japanese yen appreciated against a basket of major currencies on Wednesday, one week ahead of the much-anticipated Bank of Japan (BoJ) meeting. The BoJ mentioned in their June meeting that details around reducing their balance sheet will be made available at the end of this month after disappointing market hopefuls last month.
Japan is in the slow process of policy normalisation whereby it is expected to hike rates to a neutral that is neither stimulatory nor restrictive – said to be anywhere between 0.5% and 1.5% - but is weighing up encouraging inflation data against less than stellar consumption data.
It is hoped that reduced taxes and higher wages would stimulate a rise in local consumption and household sentiment to such a degree that the inflation target of 2% is likely to be breached consistently.
Japanese Index (Equal-Weighting in USD/JPY, GBP/JPY, AUD/JPY, EUR/JPY)
Source: TradingView, prepared by Richard Snow
USD/JPY Technical Analysis
The weekly USD/JPY chart reveals the anticipated Q3 trading range, highlighting both the upward drift at the start of the quarter, followed by the much-anticipated move lower as the yen claws back significant losses. The next level of significance is the 151.90 level of support which market the moment Tokyo decided to intervene in the FX market back in 2022. Get the full insight of surrounding the many factors influencing the yen in our comprehensive Q3 forecast:
