USD/JPY continues its upward momentum, driven by the carry trade as investors seek higher yields in the U.S. dollar.
Key Points
- Prime Minister Ishiba’s remarks and snap election create yen uncertainty.
- Japan’s verbal warnings aim to prevent a breach of the 150 level.
- Fed minutes could boost dollar demand and pressure USD/JPY shorts.
USD/JPY Daily Price Analysis – 09/10/2024
The USD/JPY pair closed Tuesday at 148.198, a modest rise of 0.01% from its opening, and continued its upward momentum today, gaining 0.22% to trade around 148.526 at the time of writing. The rally reflects a growing interest in the carry trade, as global investors favor the dollar for its higher yields compared to the persistently low rates in Japan.
The yen has been under significant pressure recently, influenced by unexpected remarks from Japan’s new Prime Minister, Shigeru Ishiba, who is known for his criticism of loose monetary policy. Ishiba’s statements, suggesting that Japan may not be ready for rate hikes, have added uncertainty to the yen’s outlook. Compounding this, the upcoming snap election set for October 27 adds another layer of unpredictability, especially as it precedes both the Bank of Japan’s monetary policy meeting and the U.S. presidential election next month.
Verbal warnings from Japanese authorities regarding rapid currency movements have tempered some of the dollar’s ascent against the yen, with officials keen to avoid a breach of the psychologically significant 150 level. However, the ongoing appeal of the carry trade has ensured a steady upward push as investors look to capitalize on the rate differential between the U.S. and Japan.
Key Economic Data and News to Be Released Today
Further influencing the dollar’s trajectory are the upcoming Federal Reserve minutes, scheduled for release later on Wednesday. The minutes will provide insights into the discussions at the September meeting, where most policymakers supported a 50-basis point cut amid concerns about a weakening labor market. Should the minutes convey a more hawkish stance than anticipated, this could fuel additional dollar demand, potentially putting pressure on speculative short positions and adding further upward momentum to USD/JPY.
USD/JPY Technical Analysis – 09/10/2024
USD/JPY seems not to be slowing down anytime soon. The pair is currently trending decently above the 200 EMA, signifying a strong bullish trend. Even more, the price is breaking the structure to the upside while closing above and retesting key levels.
On the other hand, there’s a hint of a bearish undertone in today’s price action as the RSI suggests an overbought market condition and a bearish price divergence. However, this is weak when compared to the bullish confluences. While short-term buyers may be interested in going long at the current market price, a more strategic position is after the price breaks the current high of the day.
USD/JPY Fibonacci Key Price Levels 09/10/2024
Short-term traders planning to invest in USD/JPY today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 148.371 | 147.580 |
| 148.615 | 147.336 |
| 149.011 | 146.941 |
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
