The Japanese Yen has had a remarkable week against the US Dollar, with an impressive 3% appreciation following interventions by Japan and a less hawkish stance from the Federal Reserve. Despite this, the US Dollar Index remains above 105.00, but there is downward pressure building up.
The recent interventions have pushed the USD/JPY pair from around 160.00 to 153.00, marking one of the best weeks for the Yen against the Dollar in history. It remains to be seen how long the effects of these interventions will last and if they can sustain current levels or even push USD/JPY lower.
The DXY US Dollar Index is holding steady around 105.00 as investors tread cautiously in light of the Japanese interventions. However, the recent depreciation of the Greenback could present an opportunity for US Dollar buyers to enter the market and potentially see gains, especially with the upcoming US Jobs Report data for April.
Looking ahead, the significant interest rate differential between the US and Japan suggests that the substantial appreciation of the JPY against the USD may not be sustainable in the long term.
Key market movers include the upcoming US Employment Report for April, with expectations of a slight decrease in Nonfarm Payrolls changes compared to March. Additionally, Japanese companies are facing challenges due to the weak Yen, while a surge in tourism is impacting local inflation. Japanese markets will be closed on Friday for the Greenery Day bank holiday.
Equities are trading positively, with European indexes and US Futures up around 0.5% on average. The CME Fedwatch Tool indicates a high probability of no change to the Fed’s fund rate in June, with lower rates potentially on the horizon for September.
Technical analysis suggests that the USD/JPY pair could see further declines, with a potential entry point for Dollar bulls around 152.00. This level coincides with a key support level, the 55-day Simple Moving Average, and a long-term ascending trend line.
Overall, the recent performance of the Japanese Yen against the US Dollar, coupled with upcoming market events, signifies a dynamic period for currency traders to monitor closely.