The Japanese Yen (JPY) regained some ground on Thursday, buoyed by verbal intervention from government officials, recovering part of the losses it suffered earlier in the week. The USD/JPY pair slipped from Wednesday’s high of 153.20, its highest since July 31, amid a modest retreat in the US Dollar (USD). However, further gains for the Yen appear limited, as doubts linger over the Bank of Japan’s (BoJ) ability to raise interest rates this year, compounded by political uncertainty ahead of Japan’s general election.
Despite some recovery in the Yen, it remains under pressure due to strong expectations of sustained high US bond yields, driven by concerns over deficit spending following the US election and the Federal Reserve’s likely measured approach to policy easing. This dynamic could prevent significant upside for the lower-yielding JPY in the near term.
Japan’s Finance Minister Katsunobu Kato and Deputy Chief Cabinet Secretary Kazuhiko Aoki expressed concern over the recent rapid moves in the Yen, signaling the government’s close monitoring of foreign exchange markets. However, weak economic data in Japan adds to the challenges for the Yen, as business activity in both the manufacturing and services sectors contracted in October, reflecting softer domestic and international demand.
On the technical front, the USD/JPY pair holds a bullish bias above its 200-day Simple Moving Average (SMA), with key resistance at 153.20. A sustained move above this level could pave the way for further gains towards the 154.00 and 155.00 psychological marks. On the downside, immediate support lies near the 152.00 level, with further backing at the 150.65 region.
Traders now await the release of global PMI prints, which could provide fresh short-term trading opportunities for the USD/JPY pair.
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