JPY – US-Japan Joint Intervention in Currency Market Pushes Yen to Three-Month High

On Monday morning, the U.S. dollar weakened significantly against the yen, approaching the 155 level, continuing its decline from the latter part of last week. Japan's Ministry of Finance confirmed that it intervened in the currency market with the U.S. on Thursday and Friday, buying yen and providing strong support for the yen in recent trading. According to data from the Bank of Japan, Japanese authorities may have bought as much as $58.97 billion in yen on Thursday. Furthermore, US Treasury Secretary Bessenter stated that the U.S. would "not hesitate" to participate in further joint intervention to curb disorderly yen fluctuations, reinforcing market expectations of continued US-Japan cooperation in supporting the yen. Japanese Finance Minister Satsuki Katayama subsequently echoed this sentiment, stating that the U.S. had clearly indicated the yen should appreciate and emphasizing that Japan would not hesitate to take further intervention measures.

The strengthening yen put broad pressure on the dollar, with the dollar index hitting a one-and-a-half-month low on Monday; the euro rose to a one-and-a-half-month high against the dollar, and the pound touched a two-week high. Falling oil prices also further weighed on the dollar. US President Trump's announcement of a halt to attacks on Iran and plans to begin negotiations with Iran on Monday pushed oil prices lower, weakening safe-haven buying of the U.S. dollar.

The U.S. dollar/Japanese yen pair, capped at the 164 level last week, finally saw a significant pullback on Thursday, breaking below the key 25-day moving average. The recent decline in the pair failed to break this indicator effectively, and it also broke below the upward trend line, suggesting a potential for further weakness in the short term. Support is expected at the 155 level, which was tested in early trading on Monday, and previously reached as low as 155.02 on May 6th, before embarking on a two-month upward trend. Therefore, a break below this level could trigger a new wave of declines. The next support levels are seen at 154 and 152.50, with the key level at 150. Resistance levels are seen at 157 and 157.90, with stronger resistance estimated at 160 and the 50-day moving average at 161.20.

Forecast range:
Resistance: 157.00 – 157.90 – 160.00 – 161.20
Support: 155.00** - 154.00 – 152.50 – 150.00*

This Week's Highlights:
July 31st: Bank of Japan decides to maintain policy interest rate at 1%
July Tokyo CPI (excluding fresh food) YoY: +1.9%
July Tokyo CPI (excluding food and energy) YoY: +2.0%
July Tokyo CPI YoY: +2.0%
June Job Opening/Job Seeking Ratio: 1.18
June Unemployment Rate: 2.5%
June Retail Sales MoM: -4.1%, YoY: +0.5%
June Large Retailer Sales YoY: -1.0%
June Industrial Production YoY: +4.25%, MoM: +1.3%

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