The Japanese yen is one of the worst performing G10 currencies today, nevertheless the USDJPY pair continues to struggle to get back above the key 150.00 yen per dollar zone, which from a technical point of view can be considered a key point defining the overall trend on the pair. Policymakers in Japan have backed themselves into a corner and will either have to raise rates this month or set a path for multiple hikes in 2025. Fed officials are moving in the opposite direction despite signs of US economic resilience.
Bank of Japan Governor Kazuo Ueda has plenty of data to support the case for raising the benchmark rate in December, which would mark the first triple-tightening of policy in a calendar year since the peak of Japan’s bubble in 1989.
The money market is now pricing that the BoJ will decide to raise interest rates at its September 19 meeting 0 25 bps with a 56% probability. Source: Bloomberg Financial LP
The macroeconomic backdrop in Japan is turning more hawkish. The implied spread between US and Japanese interest rates is now reaching the lowest levels seen since September 2022, when the pair traded in the 143.50 zone.
Source: Bloomberg Financial LP
Despite the overall weakness of the yen in the FX market today, the US dollar is having a hard time getting back above the psychological barrier of 150.00. From a technical point of view, it is the reaction to this zone (a breakout above it or a drop) that may define future price movements on the pair in the medium term. Source: xStation
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