The yen fell sharply against the dollar on Wednesday. USD JPY jumped nearly 2% after an official Bank of Japan official downgraded expectations of a near-term interest rate hike, undermining investor concerns that a jump could more of the Japanese currency weakened global markets
The yen fell 2.5 percent to a low of 147.94 per dollar after comments by BOJ Deputy Governor Shinichi Uchida. The dollar was last up 1.9 percent at 147.06 yen.
His comments contrasted with Governor Kazuo Ueda’s bold comments that lifted Japanese stocks last week when the BOJ unexpectedly raised interest rates, leaving them on hold for a week.
The BOJ’s hike last week, along with Tokyo’s intervention in early July, prompted investors to shy away from previously popular carry trades, where traders borrowed the yen. at low rates to invest in profitable assets.
The carry unwind has combined with weak U.S. jobs data and fears about an artificial intelligence bubble to send global stocks tumbling this week, started by a 12% crash in Japanese equities on Monday.
Adding to this, The U.S. dollar index, which measures the currency against six rivals, rose 0.18% to 103.16, inching further above the seven-month low of 102.15 it touched on Monday.
The yen’s decline was broad based, with the Mexican peso, New Zealand dollar and Australian dollar – all carry trade investment candidates – surging against the currency. The Swiss franc, another currency that was used to fund carry trades, like the yen, was down around 1.1% to 0.8612 per dollar.
Technical Outlook : U.S. Dollar ( USD JPY )
The USDJPY pair stopped its last sharp decline since August 5, 2024. Yesterday it jumped 2% to 146.90.
The formation of a doji anchor candlestick indicates a short-term upward movement. Additionally, the RSI is also trading in the oversold zone, which is likely to bounce back from today’s levels.
Therefore, a break above 148.90 should prolong the current recovery, and the pair could test between 149.50-149.95 in the coming days.
On the downside, broad support is seen at 141.25 below and the pair could test 139.50-138.90.
Happy Trading!
Commodity Samachar
Learn and Trade with Ease
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