I mentioned the slight drop in USD/JPY earlier. Japanese markets are closed today, so expect some volatility in the yen. It’s important not to focus too much on trying to predict the top, as the trend is still in favor. USD/JPY is currently hovering around 158.30 with no significant news, but brace for more yen swings and increased volatility.
Here’s a quick summary:
– Persistent US inflation will likely keep the Fed interest rates higher for a longer period.
– The large US-Japan yield gap will continue to support USD/JPY.
– With subdued Japanese inflation data and the dovish Bank of Japan staying put last week, the yen may struggle.
Traders are wary of a potential Bank of Japan intervention, but despite warnings, we have yet to see any action taken.