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With intensive data releases in the United States, will the yen continue to depreciate?
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Hello everyone, today XM Forex will bring you "[XM official website]: The US data is intensively released, will the yen continue to depreciate?". Hope it will be helpful to you! The original content is as follows:
The US dollar against the Japanese yen fell 0.33% during the day during the early trading session on Wednesday (July 30), and began to pull back since this week's high of 148.80. It is currently trading at 147.96. www.xm-forex.combined with the general weakness of the US dollar against a basket of currencies, the US dollar/JPY currency is under pressure below the 148.00 mark. Tonight's Fed's interest rate meeting and Thursday's Bank of Japan policy meeting tightened the nerves of the market and supported the yen's safe-haven position. However, a significant appreciation of the yen appears to be difficult to achieve due to a decrease in expectations of an immediate rate hike from the Bank of Japan.
The intensive release of US economic data has attracted attention
The optimism brought by the recent trade agreement between the United States and Japan and the EU may pose a resistance to the US dollar/JPY. On the other hand, the market is gradually accepting that the Fed will maintain high interest rates for a longer period of time, which may provide support for the US dollar/JPY currency, limiting its decline. Before the Fed rate is settled tonight, it is necessary to pay attention to the U.S. ADP private sector employment report, as well as Wednesday's second-quarter GDP initial value, Thursday's various U.S. PMI and personal consumption expenditure (PCE) and Friday's non-farm employment (NFP) report.
Meanwhile, the U.S. Bureau of Labor Statistics (BLS) reported in Tuesday's Vacancies and Labor Movement Survey (JOLTS) that the number of job openings on the last working day of June was 7.43 million. This is lower than the 7.71 million downward correction last month and below market expectations of 7.55 million, indicating a slowdown in the labor market. In addition, the consumer confidence index released by the World Federation of Major Enterprises rose to 97.2 in July from 95.2 last month, indicating that consumer confidence is optimistic. This could translate into an increase in consumer spending, playing an important role in stimulating economic activity and thus pushing the dollar to strongly reverse the U.S. dollar in overnight tradingIt has rebounded to its highest level since June 23.
The Bank of Japan may suspend interest rate hikes, and Japan's political situation has added uncertainty
Investors choose to wait and see before key central bank events this week, which can be seen from the weak tone of Nikkei 225 and pushes funds to the safe-haven asset yen during the Asian trading session on Wednesday. However, a significant appreciation of the yen appears to be difficult to achieve due to a decrease in expectations of an immediate rate hike from the Bank of Japan.
Data released last Friday showed that consumer inflation in Japan's capital Tokyo slowed more than expected in July. In addition, Japan's ruling coalition — the Liberal Democratic Party (LDP) and its partner Komeito Party — lost in the House of Lords elections earlier this month, adding uncertainty to the market and possibly further www.xm-forex.complicating the Bank of Japan's normalization path to policymaking.
In fact, Japan's ruling coalition reached an agreement with four major opposition parties on Wednesday (July 30) to abolish the temporary gasoline tax as soon as this year as it succumbed to opposition pressure after its general election defeat.
Bank of Japan's policy signals are in the spotlight
Although the Federal Reserve faces increasing political pressure to cut interest rates to reduce borrowing costs, the Federal Reserve still expects to maintain interest rates within the range of 4.25-4.50% by the end of Wednesday's two-day meeting. Therefore, investors will closely monitor the accompanying policy statements and the speech of Fed Chairman Jerome Powell at a post-conference press conference to find clues to future paths to rate cuts.
The Bank of Japan will also announce its policy decision on Thursday and is expected to suspend interest rate hikes. However, the Bank of Japan may offer a more positive policy outlook due to last week's trade deal with the United States and suggest a rate hike could resume later this year. The remarks of Bank of Japan Governor Kazuo Ueda will be the focus as investors hope the recent trade deal between Japan and the United States paves the way for the central bank to raise interest rates again this year.
Technical Analysis
The US dollar/JPY may have low buying opportunities in the near future, with good support near the 147.00 integer mark. Any subsequent decline may find good support near the 147.75-147.70 area. If it falls below this area, the US dollar/JPY currency pair may test the 147.00 integer mark and then fall to the 100-day EMA, which is currently around the 146.63 area. The latter coincides with last week's volatility lows. If it decisively falls below, it may make the short-term trend bearish and retest the currency against the price below 146.00.
On the other hand, the area around 148.50 and the area around overnight fluctuation highs now appear to constitute direct resistance. The second is the 149.00-149.10 area, that is, the monthly high point, the very important 200EMA, located near the 147.92 area. Continuing to stand firm at 200EMA will be seen as a strength of the US dollar/JPY longs and pave the way for retesting the 150.00 psychological mark.
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