USD/JPY

US dollar analysis: Focus turns to sticky inflation and elevated interest rates narrative as markets regain their poise – for now – as Iran downplays the impact of Israel's strikes. The EUR/USD and USD/JPY will be in sharp focus with global PMIs and BoJ policy among other risk events coming up next week.

155 has become the latest 'glass ceiling' for the rapid rise of USD/JPY. And with a key US inflation report, BOJ meeting and potential for risk-off sentiment next week, this key level could be tested and prompt a response from Japan's central authorities.

USD/JPY upside looks limited in the near-term, hindered by narrowing interest rate differentials and perceived increased risk of Bank of Japan intervention. The stronger yen may add to growing downside momentum in the Nikkei 225, putting two of the strongest market trends in 2024 under threat.

For USD/JPY, the next test to watch will be at 155.00, and if the MOF/BOJ fail to act if USD/JPY breaches that level, traders may start to turn their eyes up to 160.00 next

USD/JPY is less than a day's trade from 155, a level an ex-FX diplomat warned could trigger an intervention if breached. WTI crude oil seems to have solid support above $84, to hint at a swing low.

Sitting at 34-year highs and with market positioning nearing extreme levels, further USD/JPY upside is likely predicted on two factors this week: ongoing US economic exceptionalism and no dramatic escalation in Middle Eastern geopolitical tensions.

Net-short exposure to yen futures rose to a 16-year high last week, and now within reach of its record. Asset managers appear to be on the right side of the US dollar trade, with large speculators remaining net-short despite the dollar's rally. Net-long exposure for oil and gold futures continued to trend higher, but neither are at levels which screams sentiment extreme. And asset managers are on the cusp of flipping to net-long exposure to the VIX.

Another day, another milestone for USD/JPY which closed above 152 for the first time in nearly 34 years on Thursday.

Data since the Pandemic shows that NFP job growth has generally outperformed estimates and seen the prior figure upwards revised, which has played out well for US dollar bulls.

With the threat of BOJ intervention elevated and seemingly increasing, buying USD/JPY right now screens as high risk and low reward. Selling rallies ahead of 152 looks a far stronger trade setup, especially when you consider how significant the US rates repricing has already been this year.

Welcome to another edition of Technical Tuesday, a weekly report where we highlight some of the most interesting markets that will hopefully appease technical analysts and traders alike. In this week’s report, we will get technical on the USD/JPY, which remains supported by rising bond yields and crude oil prices, as investors await NFP among key data highlights from the US this week.

A stronger-than-expected ISM manufacturing report sent the US yield curve and the dollar higher, sending USD/JPY within reach of 152 and AUD/USD lower.

The threat of intervention from the BOJ has increased, likely limiting upside for USD/JPY in the near to medium-term. But extremely wide interest rate differentials and buoyant markets suggest it shouldn’t be significantly lower. It points to a stalemate for yen bulls and bears but opens the door for traders to play existing ranges.

GBP/USD has historically seen its strongest gains in April, while USD/CAD has seen its worst performance in April and is testing resistance at its 4-month highs near 1.3600.

USD/JPY rises to a 34-year high & is on intervention watch. FTSE falls despite Chinese industrial profits rising.

There’s not much difference between the USD/CNH and USD/JPY on the weekly charts, other than the former appears to be lagging the latter right now. With the yen falling to fresh multi-year lows even with the threat of intervention from the BOJ, will the yuan be next?

Watch out for Japanese intervention, Tokyo CPI and US core PCE inflation data this week, as the dollar rebounds after a weaker start. USD/JPY technical analysis point to a bullish breakout