The Japanese Yen (JPY) continues to underperform on Wednesday amid uncertainty regarding the timing and pace of future rate hikes by the Bank of Japan (BoJ). Despite recent verbal interventions by Japanese authorities, the Yen remains weak, with sustained US Dollar (USD) buying interest pushing the USD/JPY pair to around 152.35, the highest level since July 31.
The US Dollar Index (DXY) has climbed to its highest point since early August, fueled by expectations of less aggressive policy easing by the Federal Reserve (Fed). Concerns over potential fiscal deficits following the November 5 US Presidential election have further bolstered US Treasury yields, which are at their highest in nearly three months. This environment supports the continued depreciation of the lower-yielding JPY.
Market sentiment remains cautious, with the Yen hitting its weakest level in almost three months against the USD. Traders are also reacting to political developments, including speculation about former President Donald Trump’s potential return, which could lead to inflationary pressures from tariffs.
As tensions rise in the Middle East, with Hezbollah launching rockets near Israeli bases, investors are showing reduced appetite for riskier assets. Market participants are now focused on the upcoming US Existing Home Sales data and BoJ Governor Kazuo Ueda’s speech at the IMF-hosted “Governors Talk.”
From a technical perspective, the USD/JPY pair appears poised to extend its upward momentum while remaining above the 152.00 mark. The recent breakout above the 100-day Simple Moving Average (SMA) has triggered bullish sentiment, although the Relative Strength Index (RSI) indicates that the market is nearing overbought territory. Caution is advised for aggressive bullish traders, with potential support levels identified around 151.20-151.15 and the psychological mark of 150.00.
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