Japan

USD/JPY set a lower-high last week even as DXY spiked up to a fresh two-year-high. And there’s now a short-term descending triangle formation setting up in the pair.

The 150 level had held as resistance in USD/JPY until this week’s US open, at which point another DXY-fueled breakout appeared. The next major level up is the same that held multi-year highs in the pair in Q4 of each of the past two years.

It’s been a fast start to Q4 for the US Dollar. The turn in EUR/USD was a big driver yesterday and today, USD/JPY has taken over with buyers continuing a strong bounce from the Monday low.

Earlier this month I had warned that the fall on USD/JPY from the July high might already be a crowded trade. A plunge in open interest and an engulfing week on yen futures suggests I was right to be suspicious.

Next week brings three major central bank meetings, none of which seem to be on the same page policy wise. The Fed are expected to cut by 25bp and potentially set the record straight on another ‘50bp’ cut November, whereas there’s also an outside chance the BOJ may surprise with an interest rate hike given their renewed hawkish narrative. And while the Bank of England are expected to hold rates, a soft set of inflation figures could bring forward bets of a November cut.

USDJPY Outlook: As monetary policy cycles operate with a lag, the impact of US interest rates is increasingly evident in the weakening US labor market, pushing the USDJPY closer to its 2024 lows ahead of the Non-Farm Payroll (NFP) employment reports.

The Nikkei has been grinding higher in recent weeks, but with momentum turning lower at resistance and asset managers are increasing longs, perhaps it's ready for a leg or two lower.

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

Another way to support the Japanese yen may be for the BOJ to stop intervening in markets.

USD/JPY is breaking higher, adding to upside risks for Japanese exporter earnings.

USD/JPY is back to levels where the BOJ intervened last year but that doesn't mean it will do so again

USD/JPY has pulled back to 140 - a level currently being defended in today's Asian session. But with a plethora of economic data from the US and Japan this week, we could close either side of it (and by quite some distance).

PMI data for Japan and Australian has surpassed expectations, which provides a positive lead for flash PMI data from Europe and the US. Meanwhile, USD/JPY bulls eye a move to 140.

Japanese yen pairs were higher across the board in today’s Asian session, with hot inflation figures prompting bets the BOJ could tighten policy sooner than later.

Slower trade is a growing theme across Asia, with Japan’s export data showing signs of slower demand across Asia/ Meanwhile, USD/JPY has approached key resistance.

A surprisingly strong GDP report for Japan saw the Nikkei 225, rise to its highest level in 20-months and tap 30k.

USD/JPY remains in an uptrend after testing rising trend line support and the 50-day EMA midway through last week.