US Dollar Japanese Yen Forecast to Hover Above 100.00 Until Influential Data
The US Dollar currently lacks the appeal to advance, but as the USD/JPY exchange rate nears the key psychological resistance level of 100.00 investors are hesitant to continue selling the pair off.
‘Greenback’ recovered slightly from its worst levels on Wednesday afternoon as investors rebounded from Tuesday’s selloff. However, amid a lack of supportive data the currency’s advances were limited.
The strength of the Japanese Yen has caused issues for the Japanese government and businesses consistently in recent years as the currency affects import and export prices.
Because of this, the Japanese government has semi-regularly talked about the possibility of market intervention. While this has yet to happen, some economists believe that USD/JPY falling to 95.00 or lower could cause this concern to become a reality.
(Published 13:37 BST 07/09/2016)
This week’s US Dollar Japanese Yen (USD/JPY) exchange rate forecast has been heavily influenced by disappointing US data, primarily economic activity reports from ISM. Tuesday’s Non-Manufacturing composite score came in at a six-year-low, while the Yen was boosted by a shift in tone from the Bank of Japan (BoJ).
US Dollar (USD) to Japanese Yen (JPY) Exchange Rate Plunges Closer to Lowest Levels
The US Dollar (USD) has lost all of last week’s gains versus the Japanese Yen (JPY) over the last few days, as US data has continued to disappoint and markets have lowered bets of a 2016 Fed rate hike.
The biggest drop in the pairing came on Tuesday upon the publication of ISM’s August Non-Manufacturing PMI report.
The six-year-low score of 51.4 led to the US Dollar being sold off across the board, and the ‘Ninja’ exchange rate quickly lost over a Yen in value. Demand for the Yen was bolstered due to a surprising shift in tone from Bank of Japan (BoJ) Governor Kuroda.
Earlier in the week, Kuroda indicated that the bank may be nearing its easing limit, cheering investors. The Yen was strengthened further on Wednesday by surprisingly solid leading and coincident index scores.
As a result, the USD/JPY exchange rate currently trends in the region of 101.60.
US Dollar Japanese Yen Exchange Rate Forecast: Could the Downtrend Continue?
US Dollar (USD) exchange rates are unlikely to break out of their current downtrend anytime soon, due to a distinct lack of influential reports remaining in this week’s US economic calendar.
The US Dollar’s appeal may be buoyed slightly if Thursday’s jobless claims and consumer credit scores beat expectations, but these lower-influence reports are unlikely to cause an increase in Fed rate hike bets.
Currently, markets believe that a September Fed rate hike is increasingly unlikely, and many analysts have begun to doubt that a rate hike can happen in 2016 at all. This sentiment could continue to undermine the US Dollar’s recovery attempts going forward.
Bad news for the Japanese government, which has regularly stated that it could intervene in foreign exchange markets if the Yen becomes too strong vs. the US Dollar. If USD/JPY falls below the key psychological resistance level of 100.00, this concern could draw closer to reality.
The US Dollar Japanese Yen forecast’s main chance of recovering this week is if Thursday’s Japanese datasets disappoint. These include July trade surplus and Q2 growth results.
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