USDJPY:
The yen is benefitting from falling Treasury yields and mounting expectations that the Bank of Japan could move to a token rate hike as early as this autumn. Minutes of the 30-31 July meeting revealed that two board members want tightening on the table should inflation stay above 2 %. In parallel, the Finance Ministry has expanded its FX-intervention envelope to ¥20 trn, signalling a readiness to cap USDJPY below 150.
The U-S dollar stays under pressure: weak labour data increases the odds of a September Fed cut, while a scandal over the dismissal of the Bureau of Labor Statistics head fuels doubts about data integrity. The 10-year U-S yield has slid to 3.95 %, narrowing the spread with JGBs and dulling the dollar’s carry appeal.
A restraining factor is caution within Japan’s ruling coalition, which warns against rapid tightening given the threat of new U-S tariffs. Even so, the overall risk balance still favours yen strength thanks to potential intervention and the likelihood of a BoJ policy pivot, keeping the pair biased lower.
Trade recommendation: SELL 147.55, SL 147.85, TP 146.50
Origin: FreshForex
