USDJPY:
The yen is setting fresh local lows amid political reshuffles in Japan and expectations regarding the new cabinet’s budgetary and monetary priorities. The market interprets these changes as a factor that could delay a steady tightening of financing conditions, which reduces the yen’s appeal as a safe asset and supports the rise in USDJPY.
At the same time, the dollar remains firm due to global uncertainty and the ongoing discussion about the timing for resuming normal operations of US federal agencies. US Treasury yields are holding relatively high, and the dollar index is moving toward recent highs; via the yield differential, this supports demand for the dollar against the yen.
Taken together, political factors in Japan and stronger dollar demand create fundamental conditions for the continuation of the upward impulse in USDJPY, with the risk of occasional intervention-related comments from Tokyo.
Trading recommendation: BUY 152.45, SL 152.25, TP 153.15
Origin: FreshForex
